In the three months to December 2022, luxury goods group Richemont, reported sales growth of 5% at constant exchange rates (8% at actual exchange rates), but major trading disruption in mainland China due to the ‘massive’ Covid resurgence meant the Group’s overall performance was inhibited.
Growth across all distribution channels was led by retail and online channels with double-digit sales growth recorded by the group’s world-famous Jewellery Maisons – such as Cartier and Van Cleef & Arpels – and Other business areas (including fashion) with +8% and +6% in sales at constant exchange rates, respectively.
This served to offset a 3% sales reduction for its Specialist Watchmakers division (-5% at constant exchange rates).
Japan continued to lead growth with sales up by an impressive 43%, followed by Europe where sales grew by 19%.
Japan sales supported by return of tourism
Japan saw both solid domestic sales and a gradual return of tourism supported by the lifting of Covid restrictions mid-October as well as a comparatively weaker yen.
In Europe, sales growth was driven by continued strength in local and tourist demand, primarily from the US and the Middle East, underpinned by favourable exchange rates. France, Italy and Switzerland’s performances were particularly noteworthy.
Sales in the Middle East & Africa region rose by 10%, benefitting from the FIFA World Cup in Qatar, which added inbound tourist purchases to sustained local demand.
In the Americas, sales growth moderated to 3%, partly reflecting a greater share of purchases abroad given the strong US dollar. Overall, sales to American customers remained solid, growing by high-single digits.
Sales decline in Asia
In Asia Pacific, sales declined by 9% overall as marked sales growth in South Korea and Southeast Asia, notably in Australia and Singapore, only partially mitigated lower sales in mainland China, Hong Kong and Macau.
“The massive increase of Covid cases negatively impacted customer traffic and, due to staff unavailability, led to a reduction of boutique opening hours or temporary closures of points of sale in mainland China, leading to a sales drop of 24% during the period under review,” said Richemont.
“Against strong comparatives, all distribution channels recorded sales growth. The retail and online retail channels drove growth, with sales up by 6% each. Retail posted higher sales in all regions with the exception of Asia Pacific.”
Online retail increased its contribution to 7% of Group sales and direct sales to consumers grew to 76%. Wholesale sales were 1% above the prior-year period, adversely impacted by trading in Asia Pacific.
Jewellery and watches
Sales from the Group’s Jewellery Maisons sales grew by 8%, primarily driven by Buccellati, Cartier and Van Cleef & Arpels. Watch sales increased, albeit at a more gradual pace.
All channels and regions posted growth except for Asia Pacific. Specialist Watchmakers sales were 5% lower reflecting double-digit declines in Asia Pacific, which accounted for close to half of the Specialist Watchmakers’ sales, more than offsetting double-digit increases in Europe and Japan.
Performance varied across Maisons, with an ongoing outperformance of A. Lange & Söhne and Vacheron Constantin. The Group’s Other business area (primarily the Group’s Fashion & Accessories Maisons) delivered a 6% sales growth, fuelled by higher sales across most Maisons, and in particular at Alaïa and Peter Millar (including G/FORE). Most channels and regions posted growth.
Sales over the nine-month period to December 2022 increased by 12% at constant exchange rates and by 18% at actual exchange rates, on top of significant growth in the prior-year period (+55% year-on-year at constant and actual exchange rates).