Financière Richemont SA’s sales declined in the first five months of its fiscal year because of a “difficult global environment,” forcing the luxury group to forecast its operating profit will plummet in the first half.
Sales dropped 14 percent at actual exchange rates for the period to August 31 and slid 13 percent at constant rates. Jewelry sales, including the company’s Cartier and Van Cleef & Arpels brands, retreated 16 percent at actual rates and 15 percent at constant rates.
A steeper 19 percent slowdown in watch sales prompted the company to repurchase its slow-moving time-piece inventory “to assist its multi-brand retail partners,” mainly in Hong Kong and Macau, Richemont explained. While wholesale revenue fell across all regions, the Americas outperformed with a positive momentum in jewelry and accessories partially offsetting a sharper decline in watch sales. Retail sales were also lower in all markets, with weakness particularly pronounced in Europe and Japan.
Richemont expects operating profit to tumble 45 percent in the first half and net profit “will also be impacted at a broadly similar level,” the company said ahead of its interim results due in November 4. “We consider that the difficult trading conditions are likely to continue during September,” Richemont cautioned. “We are of the view that the current negative environment as a whole is unlikely to reverse in the short term.”
Richemont shares fell 4 percent Wednesday in early trading on the SIX Swiss Exchange.
