Richemont Swings to Growth as Sales Rise in Q3

PARIS — Brisk business in Asia spurred Compagnie Financière Richemont’s third-quarter financial performance, helping the group post a 1 percent rise in sales during the crucial holiday period despite ongoing turbulence from the coronavirus crisis.

“The quarter under review was characterized by a varied performance across regions, with the continued spread of COVID-19 resulting in a halt in international tourism and temporary closures at points of sales in line with changing local lockdown measures,” noted the owner of Cartier, Piaget, Dunhill and other high-end labels.

At constant exchange rates, the rise in sales for the three months ending Dec. 31 came to 5 percent to 4.19 billion euros, driven by 25 percent growth in Asia-Pacific.

Sales declined 20 percent in Europe, which has been deprived of deep-pocketed tourists as global tourism remains on hold. Sales rose 3 percent in the Americas region at constant rates, while the Middle East and Japan clocked 27 percent and 1 percent growth respectively. Richemont flagged resumed tourist spending in Dubai and strong domestic consumption in Saudi Arabia.

Cartier and Van Cleef & Arpels supported the performance of the jewelry division, which gained 14 percent, growing in all regions except Europe. The specialist watchmakers activity posted a 4 percent decline, reflecting ongoing challenges.

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Sales through online channels offered a lift, rising 17 percent and outpacing an 8 percent rise in retail and an 8 percent decline in wholesale channels and royalty income.

In November, Richemont entered a mega-deal with its China partner Alibaba, and with Farfetch, to accelerate growth in that market. The new venture was also supported by Artemis, an investment vehicle owned by the Pinault family.

Analysts have expected strength from Cartier as consumers focus on top brands, helping them grow market share during the current, choppy business environment.

“What really counts rom a financial point of view, Cartier, the key asset of the group, is well placed and likely to impress,” said Erwan Rambourg, analyst with HSBC, last week. Rambourg recently upgraded Richemont to buy from hold and raised the target price to 94 Swiss Francs from 83 Swiss francs, noting despite shutdowns in Europe, which likely affected November sales, leading luxury labels are increasing market share as consumers focus on “buy less, buy better.”

Luxury groups reporting full-year financial results in the coming weeks include LVMH Moët Hennessy Louis Vuitton on Jan. 26, Kering on Feb. 17 and Hermès on Feb. 19.

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