Weak China demand hurts sales at luxury goods firm Richemont

Sales at luxury group and Cartier owner Richemont were almost unchanged in the three months through June, the company said on Tuesday, as a sharp drop in Chinese demand clouded the overall result, pushing it just below expectations.

Richemont said at constant exchange rates, sales rose by 1 per cent to 5.3 billion euros ($5.77 billion), after growing by 19 per cent in the prior-year period, demonstrating resilience in a "continuing uncertain macroeconomic and geopolitical environment".

The figures compared to a consensus forecast of sales growth of 2 per cent at constant rates assembled by Visible Alpha.

At current exchange rates, sales were down 1 per cent.

"All regions delivered growth except for Asia Pacific where sales contracted by 18 per cent, as higher sales in South Korea and Malaysia only partially mitigated a 27 per cent decline in China, Hong Kong and Macau combined," the company said.

The figures follow a rocky start to the reporting season for European luxury goods companies. On Monday, a sharp drop in sales at Swiss watchmaker Swatch and a profit warning from Britain's Burberry hammered the firms' shares.

The sales report "should be met with some relief after the unhelpful setting of the scene by [Swatch] some 24 hours ago," said Jefferies.

In Europe, sales increased by 5 per cent, while in the Americas, a 10 per cent sales increase reflected sustained domestic demand across all distribution channels, Richemont said. The strongest regional sales growth was in Japan, an increase of 59 per cent, it said.