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January 21, 2013 5:59 pm
Richemont, the Swiss luxury goods group, said sales growth in Asia stalled during the past three months, in the latest indication that the region’s previously booming luxury market has slowed.
The Geneva-based company, whose stable of brands includes Cartier and Vacheron Constantin, said that in the three months to December 31 overall sales came in at €2.9bn, up 5 per cent in constant currencies, but some way short of the 8 per cent expected by analysts.
The miss was mainly due to the group’s performance in Asia, with flat sales in the region offsetting stronger rises in Europe, where sales were up 9 per cent, and the Americas, where they increased 13 per cent.
The news sent shares in Richemont down more than 5 per cent, with Swiss rival Swatch shedding 2 per cent and the French duo of LVMH and PPR also in the red, as investors speculated about the wider implications of the news for the Asian market.
Soaring demand from the region’s swelling middle and upper classes has powered the profits of luxury companies in recent years. But last year there were signs that Asian consumers were being more cautious. In September Swiss watch exports fell for the first time in three years, and exports to Greater China were also down in October and November.
Richemont’s figures reflected this slowdown, with its wholesale business recording growth of 2 per cent. “Retailers are probably still sitting on stocks that they had built up earlier in the year, which is why Richemont’s wholesale business was slower,” said Jon Cox, head of Swiss research at Kepler Capital Markets.
“However, if Asian demand does pick up, I should think retailers will start to reorder again as we move into the new year,” he added. The Asian slowdown was in part a consequence of the Chinese New Year falling later this year than last, with the result that some sales would be displaced into the next quarter, he said.
Richemont said: “At this stage, it is unclear how business patterns may develop and how the business in the Asia-Pacific region will evolve in the near future.” But it stressed that the news would not affect its investment plans.
“Richemont takes a long-term view in managing its business and will continue to invest in the development of its Maisons,” the group said.
Shares in Richemont closed down 5.6 per cent at SFr74.30 in Zurich.
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