Feeling the pinch from a tough trading environment, luxury goods retailer Richemont has announced restructuring measures, including the closure of stores.
Richemont Asia sales have declined despite a 26 per cent increase in sales in Mainland China.
Global sales fell 18 per cent in April, and the company reported a 23 per cent drop in full-year profit.
Richemont says it is cutting costs in its watch sector and plans to consolidate its global retail presence, particularly in Mainland China, while investing further in jewellery.
Richemont owns brands including Baume & Mercier, Cartier, Chloe, Dunhill, IWC Schaffhausen, Jaeger-LeCoultre, Lancel, Montblanc, Piaget, Roger Dubuis, Shanghai Tang, Vacheron Constantin and Van Cleef & Arpels.
“In the near term, we are doubtful that any meaningful improvement in the trading environment is to be expected,” said chairman Johann Rupert, revealing plans for Richemont store closures across its brands.
Richemont’s operating profit in the year ended March was $2.06 billion, down from $2.67 billion because of the cost of restructuring measures initiated to counter the Asia Pacific downturn. Full-year revenue edged up 6 per cent to $11.08 billion, helped by favourable exchange rates.
“Our concerns over geopolitical risks and the impact on the behaviour of our clients proved justified,” said the company.
“Trading conditions in Hong Kong and Macau remained difficult. Only mainland China showed good growth.”
Richemont’s final quarter was hit by slower tourist spending in Europe after terrorist attacks, while its Hong Kong business continued to bear the brunt of a strong currency which, combined with a slowdown in Chinese growth, deterred mainland tourists.