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Zurich - Richemont [JSE:CFR], the maker of Cartier necklaces and IWC Schaffhausen timepieces, reported an unexpected gain in Christmas-season revenue, boosted by demand for luxury jewellery and a rebound in watch sales at its own stores.
Revenue gained 5% excluding currency shifts in the three months through December, the Geneva-based company said on Thursday in a statement.
Analysts had predicted flat sales for Richemont’s third quarter, according to the median estimate in a Bloomberg News survey.
The company has been struggling with the biggest downturn for the Swiss watch industry since the quartz crisis in the 1980s by buying back unsold inventory from retailers and cutting jobs at Cartier, Vacheron Constantin and Piaget.
A return to sales growth in Richemont’s own watch sales may portend better orders from third-party retailers, said Alessandro Migliorini, an analyst at Mirabaud Securities. Sales improved in all regions and businesses, giving Richemont some respite after revenue fell 12% in the first half.
"The Swiss watch industry has reason to be more optimistic," Migliorini said.
"The improvement is driven by Asia-Pacific, with the Chinese as the most important customer base, but the regional improvement is more widespread than that."
Wholesale sales of watches remained negative, leading to a 2% decline in revenue at the unit at constant currencies.
Revenue in Asia Pacific, which accounted for about a third of total sales in the first half, gained 10%, the first increase in two years.
Richemont’s retail sales rose 12%. Wholesale revenue dropped 3% compared with a 20% decline in the first half.
"The retail performance is in particular positive as this is the signal that underlying consumption is recovering and as such wholesale re-ordering could follow," said Zuzanna Pusz, an analyst at Berenberg.
The company, whose full name is Compagnie Financière Richemont SA, overhauled its management in November, eliminating the chief executive officer role as Richard Lepeu retires this year and eight directors step down, making way for new managers to lead watchmaking and operations.
Other highlights:
Revenue growth of jewellery rose 8%, beating the 1.2% analysts had expected Richemont said full-year net income will face a challenging comparative as the prior year includes a €639m gain related to the merger of Net-a-Porter and Yoox Total revenue amounted to €3.09bn, exceeding the €2.96bn estimate.
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