Richemont sales beat expectations

Swiss luxury group Richemont said sales rose more than expected in the five months to Aug. 31 on a recovery in Asia, but the luxury goods group gave no word on a replacement for its watchmaking division after the departure of an executive touted as a potential future CEO. Sales for the five months ended 31 August 2017 increased by 12% at constant exchange rates and by 10% at actual exchange rates.

ack of news on a successor to Georges Kern, seen as one of the group’s most promising managers, coupled with the move to an unconventional management structure late last year, means Executive Chairman Johann Rupert will likely face questions from fellow shareholders over the current leadership crisis at its AGM on Wednesday.

Kern left to work for competitor Breitling in July after just four months as head of Richemont’s struggling watch business, which owns brands such as IWC and Jaeger-LeCoultre.

Sales in the five months from April to August jumped 12 percent at constant currency, Richemont said in a statement published ahead of its AGM in Geneva later.

Asia Pacific experienced a strong recovery, with 23 percent constant currency sales growth, but Richemont said this was partly due to stock buybacks in its watch business in the year-ago period. Without this one-off effect, constant currency sales for the group increased 7 percent, Richemont said.

The double digit sales growth during the first five months was primarily driven by strong performance in the Jewellery Maisons and easier comparative figures.

Sales increased in all regions, led by Asia Pacific. The strong performance in Asia Pacific was supported by double digit increases in most markets, including China and Hong Kong, where a large part of the exceptional inventory buy-backs took place in the comparative period. The 3% growth in Europe reflects contrasted performances within the region as well as the emerging negative impact of a strong euro on tourist spending. In the United Kingdom, however, sales grew at a double digit rate benefiting from favorable currency movements. In Japan, growth reflected higher domestic and tourist spending. Sales in the Middle East showed subdued growth, impacted by geopolitical uncertainties.

Retail sales increased in most regions, with solid growth in Asia Pacific, Japan and the Americas. Retail sales were driven by strong performances in the Jewellery Maisons and the Specialist Watchmakers as well as by the reopening of the Cartier flagship stores in New York and Tokyo a year ago. The 11% increase in wholesale sales primarily reflects the impact of the non-recurrence of the exceptional inventory buy-backs.

Richemont’s other businesses reported sales growth overall, with most Maisons showing continued progress.

Vacheron Constantin

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