Luxury conglomerate Richemont experienced a strong boost in sales for the third quarter, driven by increased tourist spending in Europe and Japan. Despite the ongoing impact of the Covid-19 pandemic on China, the company’s fashion labels continued to grow. Richemont, which owns renowned brands including Chloé, Cartier, Dunhill, and Alaïa, holds the title of the world’s second-largest luxury group.
In the final three months of the year, sales reached €5.4 billion. However, this fell slightly short of analysts’ expectations of €5.67 billion. When adjusted for currency fluctuations, sales only rose by 5%. There was a remarkable recovery in Japan, with sales surging by 30%. Similarly, Europe experienced a substantial 17% increase in sales, primarily driven by local shoppers and the recovery of tourism.
Sales in the Americas jumped by 16%, although the figure dropped to 3% when adjusted for currency. The strength of the US dollar led to a larger share of purchases being made overseas. Nevertheless, sales to American clients worldwide remained strong, growing by high single digits. However, the surge in Covid cases impacted customer traffic in China, Hong Kong, and Macau, resulting in a 7% decrease in sales for the Asia Pacific region.
Richemont explained that the decline in sales in China and other affected areas was not solely due to reduced visitor traffic but also due to staff unavailability. The company had to adjust store hours or temporarily close stores as a result. Mainland China sales were particularly hard hit, experiencing a 24% decrease.
Retail sales saw a 9% increase (6% adjusted for currency) to €3.7 billion, while online retail grew by 12% (6% adjusted for currency) to €391 million. Wholesale and royalty income also saw a 5% increase (1% adjusted for currency) to €1.29 billion. The Jewellery Maisons and ‘Other’ business areas reported double-digit sales growth, offsetting a 3% reduction in sales for the Specialist Watchmakers.
Richemont’s financial reporting was impacted by the sale of a controlling stake in Yoox Net-A-Porter (YNAP), which is now considered a discontinued operation. Additionally, Watchfinder & Co has been moved into the ‘Other’ business area. The ‘Other’ business, which includes major fashion labels, experienced sales growth driven by higher sales at Alaïa and Peter Millar. Most regions and distribution channels saw growth, aside from YNAP, which reported a 1% decrease in sales (6% adjusted for currency).
Overall, Richemont’s third-quarter results affirm the resilience of its fashion labels and the recovery of tourist spending in certain regions. Despite the challenges posed by the ongoing pandemic, the company maintains an optimistic outlook for future prospects.
Useful links:
1. Richemont official website
2. Financial Times article on Richemont
