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Zurich - Sales growth at Richemont [JSE:CFR] held up in the
company’s third quarter, easing fears the sector might be in for a marked
slowdown this year and allowing the Swiss luxury goods group to confirm its
profit goal for the year.
The maker of Cartier jewellery and IWC watches said on
Monday sales rose 24% at constant exchange rates between October and December,
beating forecasts for a 20% rise in a Reuters poll.
Buoyant Asian demand for pricey timepieces, as well as
Chinese tourists flocking to Europe’s luxury boutiques, have so far helped the
industry sail relatively unscathed through the latest bout of economic turmoil,
though recent comments from some in the sector have suggested this buoyant
picture may be changing.
“The group’s activities over the past nine months enable us
to reconfirm our expectations that operating profit for the full year will be
significantly higher than last year,” executive chairperson Johann Rupert said
in a statement.
The group’s sales reached €2.62bn against a forecast
€2.53bn.
He did not give any outlook for sales growth, but any
company comments at the Geneva watch fair (SIHH) which opens on Monday could
shed more light on the health of the luxury goods industry and brands’
expectations for the year.
Sales in the Asia-Pacific region, which accounts for 40% of
Richemont’s sales, rose 36% in the third quarter, versus a 60% progression in
the first half.
“The decline in the sales growth rate in the Asia-Pacific
region reflects demanding comparative figures and a general convergence towards
more sustainable, long-term growth rates,” the group said.
Sales growth in Europe slowed to 15% from 22% in the first
half. The region benefited from purchases made by travellers, Richemont said.
Strong demand
Growth in the Americas region, which slowed to 24% from 35%,
was driven by strong demand for jewellery and watches and a good performance of
online retailer Net-a-Porter.
Analyst Jon Cox at brokerage Kepler CM said it was a “strong
set of figures, particularly given the weaker statement from Tiffany last week.
“Growth is still above 20%, driven by Asia Pacific
obviously, but the biggest surprise is... the ability of tourists to buoy
demand in Europe while the Americas is much better than expected,” Cox said.
Richemont shares were indicated to open 1.5% higher.
US jeweller Tiffany said last week Christmas sales weakened
markedly and lowered its full-year profit forecast. Swiss rival Swatch Group
warned sales growth would slow to between 5% and 10% this year, compared with
almost 22% in 2011.
“Despite strong figures, we retain our cautious stance on
hard luxury (items) compared to soft luxury especially given signs of slowing
sell out, including Chinese data as well as weaker comparative same-store sales
trends from Tiffany,” another analyst said.
Hard luxury goods include watches and jewellery while soft
luxury refers to accessories such as leather bags and clothes.
Swatch Group and Richemont shares shed around 15% of their value last year, underperforming a flat STOXX Europe 600 Personal & Household Goods index, as markets price in a slowdown in watch sales this year.
Johannesburg-listed shares of Richemont climbed more
than 2%.
Richemont, which also trades in Switzerland, was up 2.03% at R43.75.
