Richemont sales slump

Johannesburg - Compagnie Financiere Richemont, the Swiss based luxury good group, on Friday reported a 15% decline in sales to €2.379bn for the six months ended September 2009.

First half operating profit was 39% lower at €390m.

Earnings per share from continuing operations were 35% lower at 0.623 cents.

Profit from continuing operations decreased by 36% to €345m and cash generated by the Group's operations was €321m. Net cash at 30 September 2009 amounted to €902m.

The six months ended September 2009 represent the first complete reporting period for Richemont as a focused luxury goods group subsequent to the restructuring effected in October 2008.

The company said the luxury goods industry has faced very adverse trading conditions since October 2008. As anticipated, its sales and results for the period under review were significantly lower than the comparative six-month period.

Richemont said the decrease in sales reflected the difficult trading environment in most major markets. The significant sales decreases in the Americas region, in Europe and Japan were partly offset by continuing growth in the Asia-Pacific region. Sales through the Group's own boutique network were generally more resilient than wholesale sales. At constant exchange rates, Group sales decreased by 20%.

Executive Chairman Johann Rupert said the decline in sales for the month of October across all regions was 10% at actual rates. The Asia- Pacific region saw sales 11% above the prior year, although this was more than compensated by the Americas, Japan and Europe, which all reported lower figures.

Cartier performed well in Asia, with a double-digit growth in sales in the month. Overall, the Group's retail sales for the month were 2% below last year.

"These performances were achieved against the less challenging comparative figures reported in October 2008. A cause for concern remains the significant weakening of the dollar and, to a lesser extent, the yen against the euro over recent months. These currency trends will have a negative impact on the Group's results for the second half of the year," he said.

Rupert added that the group remains cautious as to the sustainability of the improving economic outlook that we are seeing today and are prepared for a long recovery process.

However, the Group's Maisons possess the heritage, creative expertise, products and manufacturing resources - linked to the financial backing of Richemont - which will allow them to emerge from this recession stronger than before.

"Although we will continue to plan for difficult market conditions, Richemont is well prepared to reap the benefits of improved economic circumstances in the years ahead," he added.

- I-Net Bridge