Richemont slumps as Cartier owner signals slowdown
RICHEMONT shares dropped the most in three years after the Swiss luxury-goods maker signalled that Chinese sales growth has slowed and warned that trade disputes could dent demand for Cartier necklaces and Piaget watches.
The stock fell as much as 6.7pc in Zurich, erasing 2.6 billion francs (€2.29bn) of market value. Richemont reported an unexpected decline in first-half operating profit as costs rose and the company sold fewer timepieces to retailers to ease a glut in the market. “Everybody’s concerned about trade wars,” chief financial officer Burkhart Grund told reporters on a call. The results may increase concern that luxury growth is ebbing as high net-worth individuals feel their wealth threatened in a jittery stock market.
The news led to a drop of as much as 6pc in shares of both Swatch Group AG, the largest maker of Swiss watches, and Kering SA, the owner of Ulysse Nardin and Girard-Perregaux. Double-digit growth in the domestic Chinese market is over, and revenue is now rising at a high-single-digit percentage rate, which Grund described as more normal. The above-average growth phase that lasted more than a year was a reaction to a previous downturn, he said.
The CFO also warned that a weakening yuan or the trade conflicts could further damp consumption.
The comments from Richemont, which often gives pessimistic outlooks, contrast with a brighter assessment from some rivals. Burberry CEO Marco Gobbetti said last Thursday that the company hasn’t seen any dropoff recently in that market. Grund said that even if China is coming off the boil, Richemont is happy with its new growth rate there.