Luxury goods group Richemont reported disappointing results, leading to a significant drop in its shares. The company’s half-year operating profit declined by 2% to €2.655 billion, with sales growing by only 6% to €10.2 billion in the six months ending in September. This indicates a sharp slowdown in sales growth since July, especially after double-digit growth between April and June. The performance fell short of analysts’ expectations, who had anticipated sales of €10.34 billion. The company cited inflationary pressures, slowing economic growth, geopolitical tensions, and strong comparatives as factors affecting customer sentiment and sales growth.
Richemont reported sales growth in all regions except the Americas, where sales declined by 4%. Sales in the Asia Pacific region, boosted by China, grew by 14%. The company’s jewellery division, which includes brands like Cartier and Van Cleef & Arpels, saw a 10% increase in sales, but its specialist watchmakers reported a 3% decline, reaching €2 billion. Sales in the fashion and accessories division remained in line with the previous year.
Richemont’s share price dropped nearly 6% to R2,190 following the disappointing results. The company’s shares have lost more than a third of their value since May. The luxury goods industry has faced challenges due to global economic uncertainties and changing consumer sentiment.
Despite the slowdown in sales, Richemont remains in a strong financial position, with net cash of €5.8 billion, which increased by €1.7 billion over the past six months due to cash flow from its operations.
