Richemont Five-Month Sales Beat Estimates on Asia
Cie. Financiere Richemont SA, the world’s largest jewelry maker, said it expects a tougher second half after posting five-month sales that beat estimates.
Comparisons with 2009 will be more difficult as the year continues, while the strength of the Swiss franc will increase costs, the Geneva-based company said today in a statement.
“Richemont, being the cautious company that it is, does point out that the strong growth was achieved on the back of low comps and that the second half will be a tougher period,” wrote Dennis Weber, an analyst at Evolution Securities who recommends buying the stock. Sales figures were “very impressive,” he said.
Richemont gained as much as 1.3 percent in Zurich trading after the company reported a 37 percent increase in five-month revenue. That exceeded the 28 percent median estimate of nine analysts surveyed by Bloomberg. Excluding the acquisition of Net-a-Porter.com and currency swings, sales gained 22 percent.
Richemont rose 18 centimes, or 0.4 percent, to 42.04 francs at 4:54 p.m. in Zurich.
“It is far too soon to draw any conclusions about the sustainability of the economic recovery or whether the recession is truly behind us,” Chairman and Chief Executive Officer Johann Rupert said at the company’s annual general meeting.
Even so, first-half profit at the maker of Cartier necklaces and watches will be “significantly higher,” Richemont said.
Hong Kong, China
Hong Kong has become the biggest market for Swiss watches as shoppers from mainland China buy timepieces there to avoid luxury tax. Wealthy Chinese consumers own 4.4 luxury watches on average, according to the Hurun Wealth Report, which estimates there are 875,000 people in the country who have assets of more than 10 million renminbi ($1.47 million).
Richemont is “lucky” it expanded in Asia to offset a slowdown in the U.S. and Europe, Rupert told journalists after the shareholder meeting.
“We’re managing the company as if there is going to be no disaster, but ultimately, I’m concerned about the debt levels in the United States and parts of Europe,” he said.
Rupert said Chinese economic growth will continue.
“They’re smart, they study, they save, they work hard,” he said. “Obviously if there’s a slowdown in China, it’ll affect everybody. But a slowdown from what? From 12 percent to 10 percent? Or 12 percent to 7 percent? You know, I could live with 7 percent or 6 percent.”
Online Luxury
Net-a-Porter, which Richemont bought in April, will expand internationally, Rupert said. The luxury-goods website currently sells to customers in the Americas, Europe and the Middle East.
Rupert, the company’s controlling shareholder, became CEO in April after Norbert Platt, who had held the job since 2004, stepped down for health reasons. Richemont named Richard Lepeu as deputy CEO and Gary Saage as chief financial officer in March.
Richemont sells products under 19 brands including Vacheron Constantin, the Geneva watchmaker founded in 1755, and Montblanc, which has expanded into timepieces and accessories from its traditional pen business.
To contact the reporter on this story: Tom Mulier in Geneva at tmulier@bloomberg.net
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