Richemont reports strong global sales despite China slowdown

Global luxury brands group Richemont saw slow sales growth in China in the third quarter to December 31, 2023, despite global sales showing "strong momentum" with an 11% increase.

The group said in an update Thursday its overall sales had seen a "very solid calendar year end", especially compared with "demanding double-digit comparatives in the prior-year period."

Sales in China, Hong Kong and Macau combined had increased by 2%, mostly led by activity in Hong Kong, the group said. Growth elsewhere in the group's Asia Pacific operations however was "robust", with noteworthy performance in the South Korean and Australian markets, directors said.

China has been a critical growth driver for luxury goods companies over the past two decades, but the market slowed sharply in 2024 after years of double digit expansion.

In Japan in the third quarter, Richemont's sales grew by 17%, primarily driven by the group's jewellery maisons. "Local demand in the market remained strong, with tourist spending overall supportive," Richemont's directors said.

Globally, the group's four jewellery maisons, Buccellati, Cartier, Van Cleef & Arpels and Vhernier increased sales by 14%, marking "another successful festive season across all the maisons."

There had been further improvement at the Specialist Watchmakers with sales up by 7%, while the Fashion & Accessories Maisons reported a "stable" sales increase of 3%. Online retail sales were up 5%, led by jewellery maisons.

There were notable double-digit sales growth performances in the Americas, Japan and Middle East & Africa. In the Americas, ongoing strength in local demand drove a 14% rise in sales, with all business areas and all main markets contributing to the regional performance.

In Europe sales increased by 8%, led by local demand and tourist spending, particularly from North American and Middle Eastern clienteles. The UK and Italy enjoyed "robust growth". The Middle East & Africa region saw the highest regional growth with sales up by 20%, led by strength in the United Arab Emirates market and double-digit growth across all business areas.

There was solid growth across all distribution channels led by retail, up by 12% at constant exchange rates. Group nine-month sales were up by 10% at constant exchange rates and 5% at actual rates.

Continued investment was nurturing the maisons' growth prospects in a complex macroeconomic environment, marked by weaker main trading currencies and rising material costs that weighed on margins, directors said. The cash position remained "robust" at €7.6 billion, they said.

Richemont's share price increased by 4% on the JSE on Thursday morning to R3779.98, indicating favourable investor sentiment on the release of the festive season sales update - the JSE All Share Index was up by only 0.43% at the same time.

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