Richemont Results Show Continued Slowdown in Watchmaking; Cartier CEO Steps Down


Luxury conglomerate Richemont just announced its six months results that reflect the continuing slowdown in the luxury watch business, particularly in Asia, while also announcing the chief executive of Cartier resigned for health reasons. The owner of brands like A. Lange & SöhneIWC and Jaeger-LeCoultreRichemont‘s half year results show that the luxury watch business in Asia has yet to recover, particularly in wholesale. Revenue in Asia fell 17%, mainly due to the well publicised troubles in Hong Kong and Macau. And the negative factors putting downward pressure on sales were “accentuated during the month [of October]”, with revenue for the month falling 6%, an ominous sign for the rest of the year. Though the watch brands of the group managed to eke out an 8% rise in revenue, operating profit fell 13% while operating margin fell 540 basis points. That most likely is a consequence of the shift in both supply and demand towards more affordable, lower margin timepieces as well as the strength of the Swiss franc (most of its watch brands are in Switzerland). The slowdown in demand for watches is also illustrated in the diverging fates of Richemont’s wholesale and retail. While the retail business (meaning its own stores) grew 13%, wholesale revenue fell 6%. Wholesale refers to sales to authorised retailers of its brands, a business that is almost entirely comprised of watches. Jewellery – meaning Cartier and Van Cleef & Arpels – was a bright spot, growing 18% to reach a third of group sales. That being said, Richemont also noted that watch sales at its jewellery brands were down, particularly in wholesale. Alongside its results, Richemont also announced the chief executive of Cartier, Stanislas de Quercize, has stepped down with immediate effect. Citing ill health, de Quercize will become Chairman of Cartier France, after recent news reports he was suffering from “burn-out”. After a successful spell running Van Cleef & Arpels, de Quercize assumed the top job at Cartier in 2012. He will be replaced at Cartier by Cyrille Vigneron, the current President of LVMH Japan. A full report is available from the Richemont website.

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