Swiss luxury group Richemont’s share price rose more than 5percent on the JSE on Friday after the group reported a 6percent increase in sales for the third quarter to end December to 4.16 billion (R66.66bn).
By Luxus Plus
Financial highlights
- Sales in the quarter increased by 6% at actual exchange rates and by 4% at constant exchange rates compared to the prior year period, both including and excluding Online Distributors.
- Strong growth in Europe and the Americas; Asia Pacific up low-single digit, with strong double digit increases in China and Korea more than offsetting a marked contraction in Hong Kong SAR, China – all at actual exchange rates.
- High-single digit progression in retail and online retail sales, outperforming muted wholesale sales growth at actual exchange rates.
- Sales increases across most business areas at actual exchange rates, led by robust performance from the Jewellery Maisons.
Review of trading in the three month period ended 31 December 2019 at constant exchange rates versus the prior year period
Review of trading in the three month period ended 31 December 2019 at constant exchange rates versus the prior year period During the quarter under review, sales progressed by 4%, with growth in all regions except Japan.
Sales in Europe grew by 9%, benefiting from favourable comparative numbers and strong sales in most markets. Sales in Asia Pacific increased by 2%, driven by strong double digit sales growth in China and Korea, which more than offset a severe sales contraction in Hong Kong SAR, China and contrasted performances in other Asian markets.
Sales in the Americas rose by 5%, led by good performances in the US that compensated for declines in other markets. The 3% sales increase in the Middle East and Africa reflected a good performance of retail (both online and offline) and favourable comparative numbers in a soft economic environment.
Sales in Japan decreased by 7%, impacted by lower tourist spending given a comparatively stronger Japanese yen and the October 2019 value added tax increase that benefited first half sales.The retail channel posted a 5% increase in sales, notwithstanding the negative impact of temporary store closures in Hong Kong SAR, China during most of the period under review.
Sales were particularly noteworthy in China. The online retail channel saw a mid-single digit sales progression, with strong demand in the US. Sales in the wholesale channel were broadly in line with the prior year period, reflecting good performance of franchise stores, notably in Korea, partly offset by the impact of ongoing cautious watch inventory management and distribution optimisation initiatives which have now reached completion.
The 6% sales progression at Jewellery Maisons was broad-based, driven by jewellery and watches across collections. The performance of Cartier, Van Cleef & Arpels and Buccellati was particularly noteworthy given the negative impact of Hong Kong SAR, China.
Sales grew in all regions except Japan. The Specialist Watchmakers registered modest sales growth, notwithstanding a challenging situation in Hong Kong SAR, China, with higher sales in directly operated boutiques and wholesale sales broadly in line with the prior year period.
At the Online Distributors, an increasingly competitive pricing environment in online retail and disruption caused by storm damage to MR PORTER’s Landriano warehouse facilities limited sales growth to 2%.
The Group’s other businesses recorded a 3% decline in sales, reflecting challenging trading conditions for our Fashion & Accessories Maisons with the exception of Peter Millar which continued to show strong momentum in the US. The Group’s net cash position at 31 December 2019 amounted to€ 2.4billion (2018: € 2.3 billion).
Trading in the nine month period ended 31 December 2019 Sales over the nine month period to December increased by 8% at actual exchange rates and by 5% at constant exchange rates, broadly in line with the trend seen in the first six months of the financial year. They are presented in Appendix 1a.
As a reminder, sales for the prior year period included eight months of sales for YOOX NET-A-PORTER GROUP and seven months of sales for Watchfinder & Co
