Luxury goods retailer Richemont has reported its first drop in Christmas retail sales in seven years, citing a downturn in Asia and fallout from the Paris terror attacks.
And worse may be in store in the fourth quarter for the Geneva-based owner of luxury brands including Montblanc, Cartier, IWC Schaffhausen, Net-a-Porter and Alfred Dunhill – especially in the watches category.
According to data from the Swiss watch industry, stock shipments to Hong Kong, Richemont’s single largest market, are down 28 per cent.
The company said demand for luxury watches and fashion was significantly down in Hong Kong and Macau in the three months to December 31. Sales in the territories fell by 9 per cent, but that rate was less than the 15 per cent decline for the first nine months of the year, suggesting the decline was levelling out.
In contrast, Richemont said sales growth in Mainland China “continued to improve”.
In Europe, sales fell 3 per cent in the quarter after Europeans were spooked by the Paris terror attacks in November, reducing the ranks of tourists to the French capital. That followed “very strong sales growth” in the first half of the financial year, which ends next March 31.
Richemont’s global sales rose 3 per cent to 2.93 billion euros (US$3.2 billion), but on a constant currency basis fell 4 per cent, one per cent further than analysts were forecasting.