The rich su ffer too

It is dark times indeed if millionaires start holding back on buying a new Montblanc pen, a Piaget watch, a Van Cleef & Arpels necklace or a pair of Purdey shotguns.

Richemont just reported that sales in the first quarter of its financial year declined by 47% compared to the first quarter of the previous financial year.

Economies around the world were largely closed for the period under discussion from beginning April to end June.

The 47% drop in sales translates into lost revenue of more than €1.7 billion (about R33.2 billion). Sales fell to €1.99 billion in the three months to end June, compared to €3.74 billion in the same quarter a year ago.

Richemont reported “double-digit sales declines across all regions, distribution channels and business areas due to the widespread temporary store and distribution centre closures, a halt in tourism and subdued customer sentiment in many markets”.

Double-digit does not refer to numbers in the low teens, but dramatic declines in sales not seen ever.

This time around, it does not matter if one is looking at sales in constant exchange rates or actual exchange rates, by region, distribution channel or the specific luxury on offer, the damage is huge: a lot of the numbers show that sales fell by about 60%.

Online retail sales performed the best by falling only 22%, but sales to wholesalers fell by 65%, which shows that retailers down the line are not optimistic about the future either.

Only a few months ago, Richemont chair Johann Rupert reassured shareholders that the “luxury goods industry is in a privileged position”, saying the best luxury goods are not transient, but embody centuries of heritage and craft skills.

The trading update mentions that Richemont has total cash of €7.9 billion and net cash of €1.8 billion to see it through the period.