Richemont’s China Sales Fall 27%

Richemont’s revenues dipped by one percent as demand collapsed in China, Hong Kong and Macau. Sales in the region tumbled 27 percent in the six months through September, the Swiss luxury group said Friday.

In China, a lacklustre recovery from the coronavirus pandemic is dampening the economic optimism that typically drives luxury purchases. “The confidence factor is probably the most important; it is maybe at an all-time low. We have no clue how long it will last and don’t know if we’ve reached the bottom or not,” Richemont CEO Nicolas Bos said.

The dramatic decline in China offset resilience in other regions. Sales in Japan jumped by 42 percent at constant exchange rates, while sales in the Americas grew by 11 percent (10 percentage points faster than rival LVMH’s recent performance in the region). Europe sales increased by 4 percent, the Middle East and Africa by 11 percent.

Jewellery brands Cartier and Van Cleef & Arpels remain the bread-and-butter business of Richemont. Jewellery revenues increased by 2 percent despite the slowdown in China.

But sales for Richemont’s watchmaking unit, which includes brands like IWC and Jaeger-Le Coultre, slumped by 17 percent, taking a huge hit from decreased Chinese demand. “We see far better demand in the rest of the world…especially on the high end.” Bos observed. Watch sales were flat in North America and fell slightly in Europe.

Richemont reported 2 percent growth for fashion and accessories, citing rising sales at Alaïa and Peter Millar that offset declines at Chloé, Delvaux and Dunhill. The segment reported an operating loss of €23 million, “reflecting variedperformances and ongoing strategic investment to boost desirability and visibility,” Richemont said.

New designer Chemena Kamali’s first two collections for Chloé have been well received by press and gave a clear direction for marketing and merchandising, with renewed focus on supercharged femininity and Parisienne style, but sales have yet to pick up overall.”We are working to reposition where Chloé is going. The business today does not fully reflect the attractivity of the Chemena’s collections,” said Bos.

The group posted a €1.3 billion loss from discontinued operations, mainly due to write-down on the value of e-commerce unit Yoox Net-a-Porter (YNAP), which will need to be recapitalised prior to an agreed sale to German rival MyTheresa.