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Richemont Q3 sales decline 4 percent

By Prachi Singh

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For the third quarter ended December 31, 2015, Richemont sales declined by 4 percent at constant exchange rates. Sales increased by 3 percent at actual rates. The company said that the jewellery segment witnessed growth across most of the regions and product categories, partly compensating weak demand for watches.

Difficult trading impacts sales

Compared to the first six months of the current year, the slowdown in sales largely reflected weak trading in Europe and trading in the Asia Pacific region to continued to be challenging. The company said, in Europe, the decline in the third quarter, which contrasted with the very strong sales growth seen in the first six months of the year, began in November and primarily reflects lower levels of tourism in the region.

Trading in the Asia Pacific region remains challenging, it added, impacted by the continued contraction in watch demand. In terms of specific markets, the rate of sales growth continued to improve in mainland China, whereas Hong Kong and Macau both reported significantly lower sales. Sales in the Americas region continued to be subdued too.

Sales growth in Japan continued but at a lower rate than during the first six months of the current year, largely due to increasingly challenging comparatives and seasonal factors, in particular Chinese tourism. The Middle East and Africa continued to show limited growth.

Sales by product categories

Retail sales continued to significantly outperform the wholesale channel. Good demand for jewellery products contributed to the jewellery maisons’ performance. This limited the decline for the segment as a whole, given the relatively weak demand for watches. The decline in sales by the Group’s specialist watchmakers reflected caution in the wholesale channel, most notably in Hong Kong, Macau and the Americas region. The other businesses posted modest growth, mainly driven by Chloé, Montblanc and Peter Millar.

Sales growth over the nine-month period to December was flat at constant exchange rates, but increased by 11 percent at actual rates. Commenting on the outlook, the company said, the challenging trading environment is likely to prevail in the final quarter to March 31, 2016 and operating profit for the year as a whole will also be negatively affected on a comparative basis by the property disposal gain of 234 million euros (254.3 million dollars) recorded in the year ended March 31, 2015.

Richemont expects net profit for the year to benefit on a comparative basis from the non-cash gain of some 620 million euros (674 million dollars) relating to the merger of The Net-A-Porter Group with Yoox Group.

Richemont