Protests in Hong Kong have likely contributed to an unexpected drop in revenues for Richemont sales in a key luxury market.
The Cartier timepiece brand owner saw a 2-per-cent drop in sales in the last quarter and experienced a 3.9-per-cent fall in its stock price.
The effect has not been across the board within the luxury sector: competitors Burberry and Swatch announced positive results for the period, although Swatch did also note the impact on sales following the highly publicised protests.
Part of the difference in results lies in a recent inventory glut for Richemont over the past two-to-three years, compelling the firm to buy back unsold products from the market. According to the firm, the measured distribution tactics are intended to make its products scarcer, and that its new watches will be released in the next quarter.
Shipments of Swiss watches to Hong Kong dropped 27 per cent in June, averaging 6.6 per cent for the first half. The decline corresponds with a general drop in Swiss watch exports, which fell 11 per cent in June, partially set off by a boom in the mainland Chinese luxury industry, shifting sales away from Hong Kong where margins are typically higher due to lower taxes.
Boosted sales on the mainland did help Richemont post a 9-per-cent rise in comparable revenue for the quarter to June 30, offsetting the effect of the Hong Kong protests.