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Business News

Richemont warns of luxury slowdown in China as third quarter sales miss estimates

Richemont owns the Cartier and Montblanc luxury brands

Luxury giant Richemont has raised fears that China is still a source of concern for the sector after its third quarter sales missed expectations.

Sales were up 3 per cent to €2.94 billion but demand for its expensive watches in China waned. The Swiss group’s figures are in contrast to luxury fashion brand Burberry which yesterday reported a rise in sales growth in the region.

The group, which also owns online retailer Net-a-Porter.com and clothing brands including Chloé, reported organic sales up 9 per cent compared to analysts expecting a 12 per cent rise.

Richemont said wholesalers, particularly in the Asian-Pacific region, were cautious.

The group’s watches and jewellery have been hit by a Chinese crackdown on alleged gif giving and bribes at a government level. A number of luxury brands have been hit by the change.

Allegra Perry, luxury goods analyst at Cantor Fitzgerald, said that despite it being a year on since the “implementation of anti-gifting measures in fall 2012” and the “potential uplift from the earlier timing of Chinese New Year” Richemont’s Chinese sales growth was still weak.

She added: “We believe Richemont is well positioned with Cartier in the high growth and highly fragmented jewellery segment but we believe high-end watches in China remain under pressure.”

Swiss watch exports to China were down 15 per cent for the eleven months to November.