Richemont falls on the stock market after disappointing quarterly results

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The Swiss luxury group’s share price fell by 8% on Monday morning. This was a reaction to the decline in sales on the US market, while other markets and all activities were up.

 

Shares in luxury giants in general, and Richemont in particular, suffered a hangover on Monday morning.

 

Following the publication of disappointing quarterly results, the Swiss group fell by 8.0%, its “biggest one-day percentage fall for over a year“.

 

While the pan-European STOXX 600 index (.STOXX) was itself down 0.3% at 8.02am GMT, LVMH, Hermes and Kering themselves lost between 1% and 3.7%.

 

Richemont: -8%

 

Richemont’s most spectacular fall was linked to the publication of “weaker than expected organic sales growth in the first quarter“, due to the Americas. Sales there fell by 2%, with “lower wholesale and retail sales broadly in line with the previous year“.

 

This sign of weakness is worrying investors, despite the fact that the United States is one of luxury goods’ priority markets.

 

However, the overall picture is not so bad for Richemont, which reports a “solid start to the financial year with growth” in its “sales of 14% at real exchange rates (+19% at constant exchange rates)” to €5.3 billion.

 

Good overall picture

 

With the exception of the US market, sales were up “in almost all regions and distribution channels and in all business areas, at real exchange rates“.

 

Geographically, “the strong rebound in Asia-Pacific” (+40%, the strongest regional performance!) “more than offset the weakness of sales in the Americas“.

 

The lifting of Covid restrictions and the reopening of borders in mainland China, Hong Kong and Macao in January 2023, generated double-digit growth in the former and triple-digit growth in the latter two regions!

 

There were also “solid sales in other Asian markets, particularly Australia and Taiwan“, and 14% growth in Japan, despite a high basis for comparison (+90% in the previous period!). The latter benefited from buoyant local demand and tourist spending, boosted by a weak yen.

 

A winning combination

 

The same winning combination (resilient domestic demand and tourist spending, driven by American, Middle Eastern and, more recently, Chinese customers on the old continent) has buoyed the European market, but also the Middle East and Africa.

 

Sales on the Old Continent rose by a further 11% in the first quarter, after already increasing by 52% the previous year. This dynamic performance can be seen in most countries – particularly France, Italy and Switzerland.

 

In the Middle East and Africa, sales rose by 15%, driven in particular by Dubai.

 

Businesses progressing everywhere

 

In terms of activities, Richemont did better than last year everywhere. The Jewellery Houses led the way at a high rate (+19% at real exchange rates, +24% at constant exchange rates) with sales of 3.6 billion euros.

 

Its three jewellery houses – Buccellati, Cartier and Van Cleef & Arpels – all performed strongly (+24%), thanks to robust sales of jewellery and watches.

 

Specialist Watchmakers (+6% at real exchange rates, +10% at constant exchange rates) and Other Houses – Watchfinder & Co, its fashion and accessories houses (Alaïa, Chloé, Delvaux, Dunhill, Peter Millar) and Monblanc (+5% at real exchange rates, +8% at constant exchange rates) – were also up, but less spectacularly.

 

American sportswear label Peter Millar stood out with double-digit growth, “despite the relative slowdown” in its home market and “a high basis for comparison“.

 

YNAP down sharply

 

Yoox Net-a-Porter (YNAP), now presented as “discontinued operations“, recorded an 8% drop in sales (-10% at real exchange rates) “in a generally difficult environment for pure players in digital distribution“. Last summer, Richemont announced the resale of the leading online luxury retailer to Farfetch, in a process that was to be completed three years later with the transfer of 100% of the shares.

 

In terms of channels, direct sales to customers are becoming increasingly important, now accounting for 74% of the Group’s sales, thanks to an increase of 200 basis points on the previous year.

 

E-commerce grew by 2%, with varying performances across sectors, and a 14% increase for Jewellery!

 

Finally, wholesale sales rose by 11%.

 

Next dates for Richemont: its Annual General Meeting on 6 September in Geneva and the announcement of the interim results for the current financial year on 10 November 2023.

 

Read also > Richemont’s CFO becomes the group’s highest-paid executive

 

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The Swiss luxury group’s share price fell by 8% on Monday morning. This was a reaction to the decline in sales on the US market, while other markets and all activities were up.

 

Shares in luxury giants in general, and Richemont in particular, suffered a hangover on Monday morning.

 

Following the publication of disappointing quarterly results, the Swiss group fell by 8.0%, its “biggest one-day percentage fall for over a year“.

 

While the pan-European STOXX 600 index (.STOXX) was itself down 0.3% at 8.02am GMT, LVMH, Hermes and Kering themselves lost between 1% and 3.7%.

 

Richemont: -8%

 

Richemont’s most spectacular fall was linked to the publication of “weaker than expected organic sales growth in the first quarter“, due to the Americas. Sales there fell by 2%, with “lower wholesale and retail sales broadly in line with the previous year“.

 

This sign of weakness is worrying investors, despite the fact that the United States is one of luxury goods’ priority markets.

 

However, the overall picture is not so bad for Richemont, which reports a “solid start to the financial year with growth” in its “sales of 14% at real exchange rates (+19% at constant exchange rates)” to €5.3 billion.

 

Good overall picture

 

With the exception of the US market, sales were up “in almost all regions and distribution channels and in all business areas, at real exchange rates“.

 

Geographically, “the strong rebound in Asia-Pacific” (+40%, the strongest regional performance!) “more than offset the weakness of sales in the Americas“.

 

The lifting of Covid restrictions and the reopening of borders in mainland China, Hong Kong and Macao in January 2023, generated double-digit growth in the former and triple-digit growth in the latter two regions!

 

There were also “solid sales in other Asian markets, particularly Australia and Taiwan“, and 14% growth in Japan, despite a high basis for comparison (+90% in the previous period!). The latter benefited from buoyant local demand and tourist spending, boosted by a weak yen.

 

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The Swiss luxury group’s share price fell by 8% on Monday morning. This was a reaction to the decline in sales on the US market, while other markets and all activities were up.

 

Shares in luxury giants in general, and Richemont in particular, suffered a hangover on Monday morning.

 

Following the publication of disappointing quarterly results, the Swiss group fell by 8.0%, its “biggest one-day percentage fall for over a year“.

 

While the pan-European STOXX 600 index (.STOXX) was itself down 0.3% at 8.02am GMT, LVMH, Hermes and Kering themselves lost between 1% and 3.7%.

 

Richemont: -8%

 

Richemont’s most spectacular fall was linked to the publication of “weaker than expected organic sales growth in the first quarter“, due to the Americas. Sales there fell by 2%, with “lower wholesale and retail sales broadly in line with the previous year“.

 

This sign of weakness is worrying investors, despite the fact that the United States is one of luxury goods’ priority markets.

 

However, the overall picture is not so bad for Richemont, which reports a “solid start to the financial year with growth” in its “sales of 14% at real exchange rates (+19% at constant exchange rates)” to €5.3 billion.

 

Good overall picture

 

With the exception of the US market, sales were up “in almost all regions and distribution channels and in all business areas, at real exchange rates“.

 

Geographically, “the strong rebound in Asia-Pacific” (+40%, the strongest regional performance!) “more than offset the weakness of sales in the Americas“.

 

The lifting of Covid restrictions and the reopening of borders in mainland China, Hong Kong and Macao in January 2023, generated double-digit growth in the former and triple-digit growth in the latter two regions!

 

There were also “solid sales in other Asian markets, particularly Australia and Taiwan“, and 14% growth in Japan, despite a high basis for comparison (+90% in the previous period!). The latter benefited from buoyant local demand and tourist spending, boosted by a weak yen.

 

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Picture of Sophie Michentef
Sophie Michentef
Sophie Michentef has worked for more than 30 years in the professional press. For fifteen years, she managed the French and international editorial staff of the Journal du Textile. She now puts her press, textile, fashion, and luxury expertise at the service of newspapers, professional organizations, and companies.

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