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Richemont Sales Growth Misses Estimates on China Sales

Cartier Advertisement
A pedestrian walks past an advertisement for Cie Financiere Richemont SA's Cartier in Macau. Photographer: Daniel J. Groshong/Bloomberg

Cie. Financiere Richemont SA, the world’s largest jewelry maker, reported revenue growth for the first five months of its fiscal year that missed estimates because of weak demand in mainland China.

Sales rose 9 percent, excluding currency shifts, in the period through August, Geneva-based Richemont said today. Analysts expected 10 percent growth, according to the median of 21 estimates gathered by Bloomberg News. The stock fell as much as 3.7 percent, leading declines in the Swiss SMI Index.

Revenue in the Asia-Pacific region, the source of 41 percent of Richemont’s sales last year, is rising more slowly as China cracks down on the use of watches and jewelry as bribes and illegitimate gifts. Growth in that market was 4 percent in the five months, continuing a slowdown in the last fiscal year and compared with a 46 percent gain a year earlier.

“The further decline in China is disappointing,” Allegra Perry, an analyst at Cantor Fitzgerald, said in a note. “The upcoming anniversary of anti-gifting measures should raise the prospect for stabilization in this critical market.”

The stock was down 3.1 percent at 90.55 Swiss francs at 1:27 p.m. in Zurich. The shares have gained 52 percent in the past year, compared with a 26 percent gain for shares of Tiffany & Co., the second-largest luxury jewelry maker.

Mainland China’s deceleration was mostly due to “prudent consumer sentiment after several years of exceptional expansion,” Richemont said. Sales rose in Hong Kong and Macau.

Year Off

Total revenue gained 4 percent, compared with the 6 percent median estimate of 14 analysts surveyed by Bloomberg. Sales rose 14 percent in the 12 months through March, Richemont said in May when Chairman and controlling shareholder Johann Rupert also announced plans for a one-year sabbatical following today’s annual general meeting. Rupert didn’t stand for reelection to the board and said he plans to start his year off by celebrating his wife’s birthday at a game camp in Tanzania.

“Trust me, if there’s something that’s funny, you’ll see me back immediately,” Rupert said at the meeting. “I have too big an investment.”

Yves-Andre Istel, a former vice chairman of Rothschild Inc., is taking the role of chairman during Rupert’s absence and Josua Malherbe, who has worked in other companies related to the Rupert family. will be deputy chairman.

Makers of luxury goods have boosted sales as the ranks of the rich expanded. The number of people with assets worth at least $30 million rose more than 6 percent to a record 199,235 this year, with a combined fortune of almost $28 trillion, according to the Wealth-X and UBS World Ultra Wealth Report.

Richemont reports five-month sales figures each year when it holds its shareholder meeting.

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