DURBAN – The share price of Swiss luxury group Richemont declined by more than 6 percent on Friday after the group reported slow sales growth in September as economic and geopolitical uncertainties spooked consumer demand.
Its share price closed 6.40 percent lower on the JSE on Friday at R96.78.
Richemont chairperson Johann Rupert said amid growing volatility in consumer demand, partly attributable to an uncertain economic and geopolitical environment, they maintain confidence in their ability to realise the group's long-term ambitions, supported by the strength of its balance sheet.
The trade war between China and the US is affecting the maker of Cartier jewellery.
The group said, excluding Yoox Net-A-Porter (YNAP) and Watchfinder, sales rose by 6 percent at actual exchange rates and by 8 percent at constant exchange rates.
In the first five months of the reporting period Richemont grew its sales by 10 percent.
However, in some regions Richemont reported improved sales growth, especially in Europe and Asia Pacific.
In Europe with the first-time consolidation of YNAP and Watchfinder, both having a strong presence in Europe, sales in the region grew by 28 percent, while Asia Pacific reported 20 percent sales growth.
Europe and Asia Pacific accounted for 30 percent and 37 percent, respectively, of the group sales.
At the end of last month Richemont and Alibaba announced a joint venture to launch a luxury retail platform by bringing the retail offerings of YNAP group to the Chinese consumers.
It is the partnership Rupert expects to yield positive results in the future.
“During the past six months, Richemont strengthened its portfolio with two strategic investments aimed at offering our discerning and globally dispersed clientele more options. We now fully own YNAP, the leading online luxury retailer, and Watchfinder, a leading omni-channel platform for premium pre-owned timepieces. As part of the continual assessment of our portfolio, we divested Lancel,” Rupert said.
Richemont acquired YNAP for R44.89bn early this year.
He added that these strategic changes had had a material impact on the group's operating profit and net cash position in the period under review.