LONDON — Robust watch and jewelry demand from local clients fueled a 20 percent rise in fiscal first-quarter sales, Richemont said in a trading update on Wednesday.
At actual rates, sales were up 17 percent to 6.33 billion euros in the three months ended June 30. All regions except for the Middle East notched double-digit gains.
The four jewelry maisons — Buccellati, Cartier, Van Cleef & Arpels and Vhernier — posted a “remarkable” combined 24 percent rise in sales to 4.73 billion euros, according to Richemont, marking a seventh consecutive quarter of double-digit growth.
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Richemont added the maisons’ jewelry and watches performed strongly against a volatile macroeconomic and geopolitical backdrop, with sales fueled by innovations and signature lines.
The strong results sent Richemont’s share price up 4.6 percent to 191.85 Swiss francs at 8 a.m. ET on Wednesday, and drew praise from analysts. RBC Capital Markets called the results “very strong” and Bernstein said they “smashed expectations” with the biggest surprise coming from the Japanese market, where sales rose by 36 percent.
At the specialist watch division, sales were up 8 percent to 873 million euros at constant exchange, with Vacheron Constantin, Jaeger-LeCoultre and A. Lange & Söhne driving growth. Richemont said the Americas and Japan performed strongly, while Asia-Pacific remained “stable,” with declines in China, Hong Kong and Macau.
Sales at Richemont’s “other” division, comprising fashion and accessories houses such as Dunhill and Chloé, rose 9 percent to 724 million euros. The performance was positive across most maisons, with Peter Millar, Gianvito Rossi and Watchfinder & Co. delivering double-digit increases, while Montblanc showed “solid” growth.
With continued instability in the Middle East, new and more stringent visa rules in Europe and oil prices on a rollercoaster ride, clients are traveling less and spending closer to home.
In the three months, the Americas saw the biggest bounce of the quarter, with sales growing 27 percent, fueled by “continued strength in local demand,” according to Richemont.
The group said growth in the region was broad-based across all markets, channels and business areas, with particularly noteworthy performances in jewelry and specialist watches.
In Asia-Pacific, sales increased by 21 percent versus the prior-year period, led by strength at the jewelry maisons, and to a lesser degree, at fashion and accessories division.
Driven by strong demand in Hong Kong and Macau, sales rose in the double digits in China, Hong Kong and Macau combined. All other main Asian markets posted strong growth, most notably South Korea and Taiwan, according to Richemont.
In Japan, sales rose by 36 percent on strength of local demand and tourist spending against a 15 percent drop in the prior-year period. Sales were up by double digits across all business areas, led by the jewelry maisons.
In Europe, sales grew by 11 percent, against a double-digit comparative in the prior-year period, driven by “strong” demand from local clients and tourist spend, notably from North American and Middle Eastern clients.
Growth was solid across most markets, with “significant” contributions from France, the U.K. and Germany. All business areas saw their sales increase, led by jewelry.
In the Middle East and Africa, sales grew by 3 percent, with “robust local demand” offsetting the significant drop in tourist spending owing to the conflict in the region.
Sales of watches and jewelry grew, with the latter increasing in the double digits. While the United Arab Emirates market recorded “modestly” lower sales, other main markets in the region saw solid growth, Richemont said.
Richemont said its net cash position on June 30 was 9.1 billion euros, bolstered by a 400 million euros cash inflow from the disposal of its stake in the duty free operator Avolta, formerly Dufry, which it purchased in 2017.
