JOHANNESBURG - Swiss luxury group Richemont has improved its performance in the Asia-Pacific region, where it grew 23% against overall growth of 12% in the five months to the end of August.
The group said the double-digit hike was driven by strong performance in the Jewellery Maisons, with sales of 11% in Asia-Pacific and Japan, while Africa and the Middle East recorded a 2% rise.
“The strong performance in Asia-Pacific was supported by double-digit increases in most markets, including China and Hong Kong, where a large part of the exceptional inventory buy-backs took place in the comparative period,” the group said.
The group said Europe’s 3% growth contrasted performances within the region, as well as the emerging negative impact of a strong euro on tourist spending.
“In the UK, however, sales grew at a double-digit rate, benefiting from favourable currency movements. In Japan, growth reflected higher domestic and tourist spending. Sales in the Middle East showed subdued growth, impacted by geopolitical uncertainties,” the group said.
Dirk Steyn, a portfolio manager at Mergence Investment Managers, said Richemont had been actively assisting its wholesale channel to destock watches in the past two years by buying back slow-moving stock from their third-party jewellers.
Steyn said the Asia-Pacific region’s performance was "way above consensus and showed a turnaround in the destocking trend in the disturbing channel and continued positive growth in mainland China that we have seen in past few updates.
“The 2% growth in the Middle East and Africa region reflected lower consumer confidence in the Middle East regions, with the lower oil price, while in South Africa the high-end luxury market is very small,” he said.
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During the period, retail sales also increased in most regions, with solid growth in Asia-Pacific, Japan and the Americas.
“Retail sales were driven by strong performances in the Jewellery Maisons and the Specialist Watchmakers, as well as by the reopening of the Cartier flagship stores in New York and Tokyo a year ago. The 11% increase in wholesale sales primarily reflects the impact of the non-recurrence of the exceptional inventory buy-backs.”
The group said the results for the six months to the end of September would be announced in November.
In the year to the end of March, Richemont reported sales of 10.65 billion (R165.28bn) and profit of 1.21bn.
Ashburton Investments fund manager Jason Forssman said a sales increase of 12% at constant exchange rates, and 10% at actual exchange rates, was well ahead of expectations and provided recovery from a weak base, given declines during the corresponding period last year.
He said Jewellery Maison suggested a strong recovery at Cartier, while retail sales improved on the reopening of flagship stores in New York and Hong Kong.
Richemont shares closed unchanged on the JSE yesterday at R120.30.