{"id":12105,"date":"2023-11-10T10:22:32","date_gmt":"2023-11-10T10:22:32","guid":{"rendered":"https:\/\/infundpros.com\/business\/richemonts-profits-disappoint-in-latest-sign-of-luxury-industry-slowdown\/"},"modified":"2023-11-10T10:22:32","modified_gmt":"2023-11-10T10:22:32","slug":"richemonts-profits-disappoint-in-latest-sign-of-luxury-industry-slowdown","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=12105","title":{"rendered":"Richemont\u2019s profits disappoint in latest sign of luxury industry slowdown"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=2699f3c0-78b4-4f73-880e-629375282f73\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Swiss luxury group Richemont blamed a weaker economic backdrop and geopolitical tensions as the owner of the Cartier jewellery brand reported weaker than expected first-half profits. <\/p>\n<p>The company, which is also behind the Van Cleef &amp; Arpels brand, said on Friday that sales climbed 6 per cent to \u20ac10.2bn in the six months to the end of September, below the \u20ac10.34bn forecast by analysts. Net profits in the first half were \u20ac1.51bn, short of the \u20ac2.17bn forecast.<\/p>\n<p>The group, which is dominated by jewellery and watch brands, is the latest luxury company to report a slowing pace of growth which deepened in recent months as the post-pandemic luxury boom fades. Industry leader LVMH reported sales growth of 9 per cent in its most recent quarter, down from 17 per cent in the previous three months. <\/p>\n<p>Richemont\u2019s growth came under greater pressure in the three months to September 30, falling 2 per cent to \u20ac4.9bn and coming in slightly below consensus. <\/p>\n<p>While jewellery sales, Richemont\u2019s biggest division, increased 1 per cent, watch sales fell 11 per cent. Sales in the division that houses the group\u2019s fashion brands, which include Ala\u00efa and Chloe, fell 5 per cent in the second quarter while foreign exchange effects put additional pressure on margins.<\/p>\n<p>\u201cThere has been a moderation in demand, which was to be expected, because that\u2019s exactly what the central banks of the world intend. They wanted less demand, and it\u2019s across all asset classes,\u201d said chair Johann Rupert.<\/p>\n<p>\u201cWe are gaining market share in jewellery. I\u2019m not saying the total market is growing, but we are outperforming our competitors,\u201d Rupert added. <\/p>\n<p>Richemont shares fell more than 6 per cent on Friday morning to SFr105.70. <\/p>\n<p>By region Europe was hit hardest, with sales falling 1 per cent in the second quarter. The picture was more positive across Asia-Pacific where they were up 8 per cent, while the Americas region reported a 4 per cent increase. Sales in Japan climbed 12 per cent, bolstered by increased tourist spending. <\/p>\n<p>In China, the key growth market for the luxury industry, the recovery from harsh Covid-19 lockdowns that curtailed movement and spending at the end of last year had been more moderate than the rapid take-off some had expected \u2014 although Rupert said Chinese tourist spending was a bright spot.<\/p>\n<p>\u201cWe had predicted that China\u2019s [recovery] will take quite a bit longer than most of the market analysts and even competitors expected. That\u2019s proving to be correct, though we\u2019re starting to see signs when they travel to Hong Kong, Macau, even Japan, that the market is still there, it is just the feelgood factor is not,\u201d Rupert said. <\/p>\n<p>\u201cIn the medium term I\u2019m not worried about our clients having the disposable income. It is just a bit of caution on their side,\u201d he added. <\/p>\n<p>An about 8 per cent miss on operating profit expectations for the first half, which fell 2 per cent to \u20ac2.6bn, will \u201clikely lead to high-single-digit per cent downgrades to consensus\u201d for the full year, according to analysts at Citi.<\/p>\n<p>\u201cRichemont joins the \u2018moderation club\u2019 in [the second quarter], but with a front-row seat,\u201d said Luca Solca, analyst at Bernstein. <\/p>\n<p>Richemont booked an additional \u20ac500mn non-cash writedown on its lossmaking Yoox-Net-a-Porter ecommerce business, adding to \u20ac3.4bn in writedowns logged since 2022.<\/p>\n<p>Richemont is in the process of separating the ecommerce business from its core operations after announcing a plan to sell a majority stake in the unprofitable platform to an Emirati investor and online rival Farfetch last year, which received a green light from EU regulators in October. <\/p>\n<p>Farfetch\u2019s share price has plunged more than 80 per cent in the past 12 months. Rupert declined to comment on Farfetch\u2019s performance or the deal, saying \u201cwe are positive about what we see at Farfetch\u201d. <\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/2699f3c0-78b4-4f73-880e-629375282f73\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Swiss luxury&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-12105","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Richemont\u2019s profits disappoint in latest sign of luxury industry slowdown | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Swiss luxury group Richemont\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=12105\" \/>\n<meta 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