Richemont Growth Led by Europe as Asian Tourists Boost Spending
Revenue from Europe rose 19 percent, excluding currency shifts, in the five months through August, compared with gains of 12 percent in the Asia-Pacific region and 6 percent in the Americas, the Geneva-based company said today.
Wealthy Asian visitors are spending more on luxury goods in Europe, attracted by a decline in the value of the euro amid the region’s debt crisis. Richemont reiterated a forecast made last month that first-half profit may rise 20 percent to 40 percent and said it remains confident of its long-term potential.
“Europe banged out a great set of a numbers driven by Asian tourists taking advantage of the weak euro to buy watches and jewelry here,” said Jon Cox, head of Swiss research at Kepler Capital Markets.
Richemont rose 1.3 percent to 59.90 Swiss francs as of 9:04 a.m. in Zurich trading, taking this year’s gain to 27 percent.
Total sales increased 23 percent in the five-month period, matching the average estimate of eight analysts surveyed by Bloomberg. Growth has slowed since May, when the company reported a 29 percent gain in revenue for last year.
Excluding currency shifts, five-month revenue gained 13 percent, unchanged from the rate of the first four months. That compared with last year’s 30 percent increase and Richemont said the month-on-month growth rate is declining.
“There’s been a slowdown, but the comparison base was very strong,” said Rene Weber, an analyst at Bank Vontobel in Zurich, who expects growth to continue to slow. “It’s in line with expectations and things are still on track.”
The U.S. dollar traded 12 percent higher against the euro on average during the first five months of Richemont’s fiscal year. The company, which reports earnings in euros, doesn’t release profit figures for the first five months.
Sales in Richemont’s jewelry unit, which generates about half of the company’s revenue, rose 12 percent.
Revenue from the watch division gained 16 percent. The company got about a quarter of its sales in the 12 months through March from the unit. Richemont said in May that growth had slowed in some Chinese coastal cities. The same month, Swatch Group AG (UHR) Chief Executive Officer Nick Hayek said demand at the very high end of the watch market in China had eased.
Swiss watch exports increased about 16 percent during the first seven months of the year, according to the Federation of the Swiss Watch Industry.
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