Wristwatches sit in a window display of a Cartier luxury store
Richemont, the maker of Cartier jewelry, reported that third-quarter revenue growth stagnated for the first time in six years as protests in Hong Kong disrupted sales in the biggest market for Swiss watches.
Revenue excluding currency shifts was unchanged in the three months through December, compared with the year-earlier period, the Geneva-based company said yesterday in a statement. Analysts expected 1.5 percent growth, according to the average estimate in a Bloomberg survey. The shares slid as much as 2.4 percent in Zurich trading.
Protests in Hong Kong, where rich Chinese purchase watches and jewelry at lower tax rates than on the mainland, caused shops to close in September and October. The pro-democracy demonstrations coincided with the China National Day holidays known as Golden Week, one of the busiest times of the year, as well as a watch industry show in the city.
“Asia Pacific is clearly disappointing,” Patrik Schwendimann, an analyst at Zuercher Kantonalbank AG in Zurich, said by phone. “Watch sales in Asia are still impacted by high inventories and cautious retailers. There are rays of hope elsewhere: Europe, with domestic demand and tourism, the Middle East and the U.S.”
Sales in the Asia Pacific region declined 12 percent at constant exchange rates amid a difficult trading environment in most markets, especially in Hong Kong and Macau, said the company, whose full name is Cie. Financiere Richemont SA. That compares with the 5.8 percent drop analysts had estimated in a Bloomberg survey.
Net cash rose 14 percent to a record 4.9 billion euros at the end of the period, said the company, led by Chairman Johann Rupert, a South African billionaire who returned to Richemont in September after taking one year off. The luxury-goods maker will probably “put to work” some of that pile making acquisitions, Mario Ortelli, an analyst at Sanford C. Bernstein, wrote in a note yesterday.
“The return of Mr. Rupert to the helm of the company after his sabbatical could be an accelerating factor for the M&A strategy of the group,” he said. The analyst expects improvement in the second half due to a foreign-exchange reversal, retailers ordering more after having run down their inventories, and a possible new line of Cartier watches.
Richemont doesn’t report profit for the fiscal third quarter. The company reported a 4 percent drop in first-half operating profit in November, when the company also said the decline in the Chinese market was moderating. Corinne Gretler, Bloomberg
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