Richemont reports an unexpected boost in revenue

RICHEMONT, the maker of Cartier necklaces and IWC Schaffhausen timepieces, reported an unexpected gain in Christmas-season revenue, boosted by demand for luxury jewellery and a rebound in watch sales at its own stores.

Revenue gained 5 percent excluding currency shifts in the three months to December, it said in a statement yesterday.

Analysts had predicted flat sales for Richemont’s third quarter, according to the median estimate in a Bloomberg News survey. The company has been struggling with the biggest downturn for the Swiss watch industry since the quartz crisis in the 1980s by buying back unsold inventory from retailers and cutting jobs at Cartier, Vacheron Constantin and Piaget.

A return to sales growth in Richemont’s own watch sales might portend better orders from third-party retailers, said Alessandro Migliorini, an analyst at Mirabaud Securities.

Sales improved in all regions, giving Richemont respite after revenue fell 12 percent in the first half.

“The Swiss watch industry has reason to be more optimistic,” Migliorini said. “The improvement is driven by AsiaPacific, with the Chinese as the most important customer base, but the regional improvement is more widespread than that.”

Wholesale sales of watches remained negative, leading to a 2percent decline in revenue at the unit at constant currencies. Revenue in Asia-Pacific, which accounted for about a third of total sales in the first half, gained 10percent.

Richemont’s retail sales rose 12 percent. Wholesale revenue dropped 3 percent, compared with a 20 percent decline in the first half.

“The retail performance, in particular, is positive as this is the signal that underlying consumption is recovering and as such wholesale re-ordering could follow,” said Zuzanna Pusz, an analyst at Berenberg.

The company overhauled its management last November, eliminating the role of chief executive as Richard Lepeu was set to retire this year and eight directors stepped down.