Chairman of Remgro Limited Johann Rupert. Picture: Itumeleng English/African News Agency (ANA)
Richemont’s resilience was severely tested in one of its key markets, with Hong Kong reporting a 2 percent decline in sales in the first quarter to end June as a result of ongoing protests in that region.

“Sales in Hong Kong retreated, additionally impacted by the relative strength of the Hong Kong dollar and the recent street protests,” Richemont said. However, a 12 percent increase in overall sales to 3.74 billion (R58.363bn) was enough to offset its weak performance in Hong Kong.

The sales were boosted by a 50 percent increase achieved by the group’s retail sales.

The group said excluding online distributors, sales increased by 6 percent at actual exchange rates and by 3 percent at constant exchange rates.

Richemont owns a portfolio of leading international Maisons and it operates in three segments: Jewellery Maisons, which are Cartier, Van Cleef and Arpels and Giampiero Bodino; Specialist Watchmakers with brands such as A Lange and Söhne, Baume and Mercier; as well as watch component manufacturing activities. The group’s division of specialist watches declined by 2 percent during the quarter after facing stiff competition.

The group’s specialist watch brands have suffered from excess inventory and the group has been forced to buy back some of its unsold stock from the market since 2016.

The Middle East and Africa region also reported a 7 percent decline in sales during the quarter.

“The 7 percent sales progression at Cartier and Van Cleef & Arpels was supported by jewellery and watches. Sales grew in all regions with the exception of the Middle East and Africa,” the group said. It said its 3 percent sales reduction in its other businesses included the impact of the disposal of Lancel in June 2018.

“Excluding this impact, sales decreased by 1 percent as the strong performance of Peter Millar contrasted with that of the other Maisons,” Richemont said.

The group’s retail channel reported a 6 percent increase in sales, driven by the Jewellery Maisons and to a lesser extent the Specialist Watchmakers after reporting a double-digit growth compared to the same period last year.

However, it said ongoing cautious watch inventory management and distribution optimisation initiatives continued to negatively impact the wholesale channel, which posted a 2 percent decrease in sales while the online retail channel delivered a strong double digit increase in sales, which was up by 56 percent.

Richemont shares closed 2.39 percent higher at R236.50 on the JSE yesterday.

BUSINESS REPORT