Richemont Third Quarter Results Continue Downward Trend

Richemont’s recently released results for its third quarter demonstrates the persistent weak demand for watches, especially in Asia and at independent retailers. With SIHH 2016 just around the corner, Richemont has announced subdued third quarter results, setting the tone for the trade fair that takes place in Geneva next week. Revenue for the quarter ended December 31, 2015 was down four percent at constant exchange rates, with the Asia-Pacific posting the biggest decline amongst regions, down by nine percent. Sales in Hong Kong and Macau were “significantly lower”. Independent retailers (known as the wholesale channel in industry parlance), continued to reduce their orders, so wholesale turnover was down eight percent. This was most pronounced in Hong Kong, Macau and the Americas.  Wholesale is primarily made up of watches, since Richemont’s other divisions (jewellery and others), mainly operate their own stores. Retail sales, meaning those at Richemont’s own boutiques, remained flat. The group’s watchmakers saw their sales dip four percent, while jewellery products enjoyed “strong demand”. However, the jewellery division saw its sale drop five percent, because it includes the entirety of Cartier and Van Cleef & Arpels, both of which also sell watches. Richemont’s guidance for its full year results due in May 2016 is appropriately pessimistic: “challenging trading environment is likely to prevail in the final quarter to 31 March 2016.” All of this is continued proof that our predictions for the watch world in 2016 will come true.

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