Richemont: yellow vests dent sales, China still strong
According to luxury conglomerate Richemont (owner of Cartier, Van Cleef & Arpels, and other high-class brands) “yellow vest” protests in France weighed on luxury sales at the end of 2018. The world’s second-largest luxury group reported third-quarter earnings at the end of last week, which encompassed the months of October to December. And, while French sales may have slowed due to protests, the good news is this: other key markets (we’re looking at you, China) continued to see growth “at a healthy pace”.
Richemont’s share price increased by more than 5% last week
Source: Yahoo Finance
Investors have been up in arms recently, as worries over Chinese demand (due to the on-going trade war and some concern over the numbers coming out of the country) have been exacerbated. The cause of this exacerbation is none other than iPhone-maker Apple’s precipitous fall from grace. Dominion has already given its view over the Apple situation (see here). But investors will be further calmed by Richemont’s news that the market performed well over the last quarter.
Richemont said that it saw a 5% increase in sales on a constant currency basis, against the third quarter in the previous year. That’s a slight slowdown from 8% in the previous quarter, but it hit analyst estimates. According to Richemont, growth continued in all markets other than Europe and the Middle East. These sales figures exclude two major events in recent months: the acquisition of second-hand luxury watch ecommerce group Watchfinder, and of online fashion platform Yoox Net-a-Porter. Add those back in, and sales rose by 24%, year on year.
In France, the company said that protests “negatively impacted tourism and led to store closures for six consecutive Saturdays.” Whereas sales in China continued to outperform. Richemont stepped back from breaking out specific numbers for China, but did say it growth came in at “double digit” figures. For Asia-Pacific as a whole, growth stood at a very respectable 10%, year on year.
Dominion holds Richemont in its Global Trends Luxury Fund.
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