Richemont flags softer demand, shares fall

The Swiss group, which owns Cartier, Van Cleef & Arpels, Chloe and IWC, among others, reported a 6% increase in sales in the six months to September end, to €10.2bn. Analysts had forecast interim sales of €10.34bn.

Operating profits dipped 2% to €2.7bn, with the operating margin easing 210 basis points to 26%.

Net profits were €1.5bn, compared to last year’s €766m loss. Analysts had expected net profits of €2.17bn.

Richemont, which is dominated by jewellery and watch brands, said the first half had started "beyond our expectations" before growth started to ease.

Constant currency sales growth in the second quarter was 5%, compared to 19% in the first.

The group said inflationary pressures, slowing economic growth and geopolitical tensions had started to affect customer sentiment, adding: "Consequently, we have seen a broad-based normalisation of market growth expectations across the industry."

As at 1030 GMT, shares in Richemont were trading nearly 7% lower.

Victoria Scholar, head of investment at Interactive Investor, said: "The disappointing performance at Richemont echoes a similar slowdown in performance at French rival LVMH. The weak global macro backdrop, with rising interest rates, elevated inflation and China’s bumpy recovery, are weighing on demand for luxury goods, particularly watches at Richemont.

"Luxury was a market winner at the start of the year, but the sector’s glow is now fading as even the aspirational, higher-end customers feel the squeeze with spending on the decline as belts tighten."