LUXURY – Richemont’s Asian Sales Soar

 

By John Revill
ZURICH—Accelerating Asian demand helped luxury jewelry and watchmaker Compagnie Financière Richemont SA report a 33% sales increase for the three months ended Dec. 31.

Richemont said Monday its sales in the Asia-Pacific region surged 57% to €772 million ($1.03 billion) as Chinese consumers bought products like Cartier jewelry and Piaget and Vacheron Constantin high-end watches. This compares with a growth rate of 25% a year earlier, making Asia-Pacific the company’s fastest-growing region.

Analysts said the region is now on course to overtake Europe as the company’s largest. “Asia-Pacific could already be the biggest market, especially when tourists are taken into account,” said Zürcher Kantonalbank analyst Patrik Schwendimann.

The Geneva-based company said Monday its sales in the crucial Christmas period rose to €2.12 billion from €1.56 billion a year earlier.

“Richemont’s Maisons performed well and saw good sales growth, particularly at the retail level, during the three-month period,” said the company, whose jewelry brands include Van Cleef & Arpels as well as Swiss watchmakers Jaeger-LeCoultre and Baume & Mercier.

“These figures were better than expected, with Asia-Pacific growth accelerating in organic terms,” said Kepler Equities analyst Jon Cox.

Asia now is only slightly smaller than Europe, traditionally Richemont’s largest market, where sales increased 20% to €791 million.

Looking ahead, the company said higher comparative figures would make its final quarter, the three months to March 31, more difficult.

Executive chairman Johann Rupert also warned about a negative currency impact from the strong Swiss franc.

“Gross margin is anticipated to be negatively affected by a stronger Swiss france given the Group’s Swiss manufacturing base,” he said.

But analysts shrugged off the downbeat forecast, saying Richemont is traditionally cautious. “This is a typical Richemont statement,” Mr. Schwendimann said. “They have really strong figures and then expect the worst.”

Richemont produces much of its jewelry outside Switzerland, which would protect it against a rising Swiss franc, and would be able to pass on price increases to customers, he added.

The performance continued the sales increase Richemont achieved during October, when it posted a 36% rise compared with the previous year.

All divisions increased sales during the latest three-month period. Jewelry sales were up 30%, specialist watch sales also rose 30% and the writing division—which includes the Montblanc brand—increased sales by 19%. Its “other” division, which includes brands Alfred Dunhill and Chloe, increased sales by 75%.

The luxury sector has enjoyed a strong rebound in recent months with Richemont and its French peers all posting sales increases. In the six months to September, Richemont sales grew 37%, Moët Hennessey Louis Vuitton said its third-quarter sales rose 23%, while Gucci and Yves Saint Laurent owner PPR SA said its sales rose 12.9% in its third quarter. Richemont reports its annual results on May 19.

More on: http://online.wsj.com/article/SB10001424052748703396604576087270925392678.html?mod=googlenews_wsj

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