Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Richemont's strong sales in U.S. and Europe help soften China weakness

Published Jul 15, 2022 01:51AM ET Updated Jul 15, 2022 03:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The logo of the luxury goods company Richemont is pictured at its headquarters in Bellevue near Geneva, Switzerland, June 2, 2022. REUTERS/Denis Balibouse
 
UHR
-1.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FTCHF
-16.82%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Silke Koltrowitz

ZURICH (Reuters) -Luxury goods group Richemont on Friday reported higher sales in the United States and Europe in the three months to June, which offset a 37% drop in mainland China, where weakness in the economy is a worry for investors.

Big luxury companies have benefited from a rebound in demand for watches and jewellery after the COVID-19 pandemic, but a new wave of lockdowns in China hit sales in April and May, a situation flagged this week by rivals Swatch Group (SIX:UHR) and Burberry.

Richemont, maker of Cartier jewellery and IWC watches, also felt the impact of store closures in mainland China, where its sales were 37% lower for the quarter.

"The rate of decline softened to 12% in June when restrictions were progressively eased," Richemont said in a statement.

The weakness in China's economy was highlighted in the country's second quarter GDP figures on Friday, which showed sluggish growth of 0.4% in the April-June quarter from a year earlier.

Richemont shares, down over 26% so far this year, were down 5% at 0714 GMT.

Citi analyst Thomas Chauvet pointed to weakening macro data in the United States and an "uncertain shape of recovery in China".

The company's overall sales growth of 12% at constant currency, to 5.264 billion euros ($5.27 billion), exceeded Swatch Group's first-half growth rate of 7.4% thanks to Richemont's higher exposure to the fast-growing jewellery category and an increasing share of own branded stores.

Richemont said sales increased 42% in Europe "sustained by robust domestic demand and a return in tourist spending, primarily from American and Middle Eastern clients", while the Americas were up 25% driven by strong domestic spending.

RBC Capital Markets analyst Piral Dadhania said the performance was "reassuring" given the China headwind and said the improvement in China in June should provide assurances on the potential for recovery into the second quarter.

Vontobel analyst Jean-Philippe Bertschy said Richemont was setting the industry benchmark for the first half of 2022.

"The strong U.S. consumer was able to totally offset the weak performance in China," he said, noting the absence of a comment on its plan to sell a stake in its online business Yoox-Net-A-Porter (YNAP) to Farfetch (NYSE:FTCH).

Kepler Cheuvreux' Jon Cox said Richemont's online business was holding overall sales back and he expected YNAP to be fully divested ultimately.

($1 = 0.9985 euros)

Richemont's strong sales in U.S. and Europe help soften China weakness
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email