Just before the opening of SIHH 2019 (Salon International de la Haute Horlogerie), Switzerland-based luxury conglomerate Richemont has released its trading update for the quarter ended 31 December 2018. Richemont announced that sales in the quarter rose 25% at actual exchange rates and 24% at constant exchange rates – results that should, however, be nuanced across the business portfolio.
Organic growth in-line with expectations
Richemont’s results are mainly boosted by the consolidation of Yoox Net-A-Porter and Watchfinder (reflecting Richemont’s efforts to build direct online sales channels). YNAP has been consolidated since May 1st and Watchfinder since June 1st.
Excluding its recent e-commerce acquisitions, the luxury group said that sales for the period increased by 6% at actual exchange rates and 5% at constant exchange rates – an announcement in-line with market expectations.
Richemont’s Performance across geographic and business areas
Most regions report an increase in sales. The performance was particularly strong in the Americas (+43%) and Europe (+34%). The increase was of +17% for Asia Pacific and +14% for Japan. The Middle East and Africa are the only areas to report a sales decrease (-3%).
Excluding the impact of the acquisitions, Richemont states that: “Sales grew in all regions, with the exception of the Middle East. During the latter part of the quarter, sales in Europe were affected by social unrest in France… A 10% increase in sales in Asia Pacific reflected double-digit sales growth in mainland China… Sales in the Americas rose by 9%.”
By business area, sales increased by 9% for the Jewellery Maison (Cartier and Van Cleef & Arpels) and by 1% for specialist watchmakers.
Richemont’s Performance over 9 months
Over the 9-month period ended in December 2018, sales increased by 23% at actual exchange rates and 24% at constant exchange rates. Excluding the acquisitions, sales rose by 6% at actual exchange rates and 7% at constant exchange rates.
This business statement was particularly awaited in view of fears on global trade tensions and on an Asia slowdown (in particular with concerns over the spending of affluent Chinese). The “Yellow Vest” protest in France could also have an impact on the luxury business in the region.
As a comparison, sales growth was slower for Luxury watchmakers over the second part of the year. Swiss watch exports increased by 10.4% over the first six months of 2018 and by 7.1% over the first 11 months of 2018.
Richemont will announce its annual results on May 17th, 2019. For more details, please visit www.richemont.com.