Richemont faces tough market after April sales plunge

Geneva - Richemont [JSE:CGR], the maker of Cartier jewellery and IWC Schaffhausen timepieces, forecast a difficult first half after sales plunged 18% in April.

The Swiss company also reported full-year earnings that missed analysts’ estimates on Friday, dealing a further blow to the ailing luxury-goods industry.

“In the near term, we are doubtful that any meaningful improvement in the trading environment is to be expected,” chairperson Johann Rupert said in a statement. “Challenging comparatives will persist through September.”

The company, whose full name is Compagnie Financière Richemont SA, has been struggling with the strong franc and is cutting almost 100 jobs in its Swiss watchmaking operations. Aside from weak demand in Asia, Richemont is also affected by a slowdown in tourism to Europe following the Paris terror attacks in November, a trend that analysts say may extend after the bombings in Brussels in March.

“We also expected a negative growth in the first half, but we will adjust our estimates downwards,” Rene Weber, an analyst at Bank Vontobel, wrote in a note.

Operating profit fell to €2.06bn in the 12 months through March, the Geneva-based company said. That missed the average analyst estimate of €2.29bn.

Co-chief executive officer Bernard Fornas retired at the end of March, leaving Richard Lepeu as sole CEO.