Slow Richemont sales strike fear
Investors take stock after luxury sector rallies strongly
Slowing demand for Richemont’s luxury goods in Asia prompted a selloff in its shares and sent a chill down the backs of investors across the luxury sector.
The Swiss company behind Piaget and Jaeger- LeCoult said sales in the three months to December were lower- thanexpected, in part due to flat sales in China, following several years of what the company described as “exceptional growth”.
Group sales rose by 5 per cent on a constant exchange rate basis compared with consensus expectations of 7.6 per cent, according to a Reuters poll. Investors saw the news as reason enough to sell Richemont’s peers across the region.
“The sector has rallied pretty strongly over last few weeks and now for Richemont to come in with weaker numbers, people are probably just taking stock and reassessing the bigger picture,” said Christopher Walker, analyst at Nomura.
The recent bull- run in luxury stocks has been fuelled by a positive trading update from London’s Burberry, which revealed stronger- than- expected retail sales driven by a rebound in China and Hong Kong, even as it warned of pressure on its wholesale business.
The news came as a relief to investors frightened by the fashion house’s full profit warning earlier in the year.
Record year
Richemont’s Swiss peer Swatch also brought good news to the market earlier this month when it said 2012 was a record year.
The group said sales rose 14 per cent over the year, led by its watches and jewellery division.
The Swiss group revealed last week that it would pay $ 1 billion ( Dh3.67 billion) for the Harry Winston Diamond Corporation.