Tourists boost Richemont's Q3, fashion is strong but Covid-hit China dents sales
Luxury giant Richemont reported Q3 sales up 8% on Wednesday, saying that despite ongoing Chinese weakness, tourists were returning to Europe and Japan.
And while the to-be-sold Yoox Net-A-Porter (or YNAP, which is now treated as a discontinued operation) still saw lower sales, Richemont’s continuing fashion labels carried on their growth trajectory.
The Chloé, Cartier, Dunhill and Alaïa owner is the world’s second-largest luxury group. It saw sales rising to €5.4 billion in the final three months of the calendar year, although that was below the €5.67 billion analysts had forecast. And with currency movements taken out of the picture, sales rose only 5%.
As mentioned, Japan, saw a strong recovery with sales up 30%, or 43% at constant currency (CCY) as local shoppers continued to buy and tourism gradually bounced back. The weak yen, and the ending of pandemic restrictions in October were important factors.
Sales rose a healthy 17% in Europe (19% CCY), and like Japan, were boosted by a mixture of local shoppers and the tourism recovery with luxury consumers from the Middle East in the US in particular being noteworthy.
The Americas enjoyed a 16% sales leap, although this was a more muted 3% CCY. That partly reflected a greater share of purchases abroad given the strong US dollar. But while CCY sales within America might look tepid, overall, sales to American clients globally remained “solid”, growing by high single digits.
However, the company did say that the surge in Covid cases hit customer traffic in China, as well as in Hong Kong and Macau, leading to a 7% fall in Asia Pacific sales (down 9% CCY). The company said it wasn't only about visitor traffic in the pandemic affected locations but also staff unavailability, which meant it had to cut store opening hours or even temporary close them. That drove mainland China sales down 24%.
By distribution channel, the company said retail sales rose, 9% (or 6% CCY), to €3.7 billion. And online retail rose 12% (also up 6% CCY) to €391 million. Wholesale and royalty income was up 5% (or a slim 1% CCY) at €1.29 billion.
The company reported double-digit sales growth at the Jewellery Maisons and ‘Other’ business areas (up 11% and 10% in total, or 8% and 6% CCY, respectively), offsettting a 3% sales reduction at the Specialist Watchmakers (down 5% CCY).
Its figures are reported slightly differently from how they were previously given that in August last year it announced it would agree to sell a controlling stake in YNAP (which as mentioned, is now recorded as a discontinued operation). And it moved Watchfinder & Co into the Other business area.
That Other business contains its key fashion labels and its sales growth was “fuelled by higher sales across most Maisons, and in particular at Alaïa and Peter Millar (including G/FORE)”. Most channels and regions posted growth. Meanwhile YNAP posted a 1% sales reduction, or a 6% CCY drop.
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