Richemont Group Releases Q3 Briefing Asia is underperforming
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On January 15, 2015, Richemont released its third-quarter report for the fiscal year 2014/2015, revealing a sharp decline in sales in the Asia Pacific region. This led to a drop in the company's stock price by over 14% on that day, signaling concerns about the luxury market's performance in key regions.
From September 1, 2014, to December 31, 2014, the Group reported total sales of €3.051 billion (approximately $3.59 billion), reflecting a 4% increase compared to the previous year. However, at constant exchange rates, sales remained flat, falling short of Reuters' forecast of a 1% growth. Despite this, strong performances in Europe, the Middle East, and the U.S. helped offset the weak results in the Asia Pacific region.
The "Occupy Central" protests in Hong Kong significantly impacted the local market, especially for luxury watches, which saw a steep drop in demand. The Group maintained a strong cash position, with €4.9 billion in cash as of December 31, 2014 — a 14% increase from €4.3 billion in the same period the previous year.
Over the first three quarters of the fiscal year, total sales rose by 3% year-on-year, with a 2% increase at constant exchange rates. In Europe, sales reached €1.192 billion, up 9% at constant exchange rates, driven by increased spending from international tourists due to the weaker euro. U.S. sales totaled €547 million, showing a 7% increase at constant exchange rates, though this marked a slowdown compared to the previous six months.
In contrast, the Asia Pacific region struggled, with sales reaching only €1.07 billion — a 12% decrease at constant exchange rates. Hong Kong and Macau were particularly affected, with some stores temporarily closing during the Chinese Golden Week due to the ongoing social unrest. Japan also faced challenges, with sales declining further due to an increase in consumption tax, although they still managed a 2% growth at constant exchange rates.
Looking at sales channels, direct retail sales accounted for €1.744 billion, or 57.16% of total sales, rising by 2% at constant exchange rates. Meanwhile, wholesale sales fell by 2% at constant exchange rates. The report highlighted that new store openings, jewelry collections, and the performance of Net-a-Porter contributed significantly to retail growth.
In terms of product categories, jewelry brand sales declined by 1% year-on-year at constant exchange rates, but performed better in retail channels. Watch brands, however, saw a 4% drop in sales, largely due to cautious behavior from partners and reduced demand in Hong Kong and Macau. Net-a-Porter continued to outperform, driving growth in the “other†segment, including e-commerce and fashion, by 7% year-on-year.
This quarterly report underscores that the luxury industry was still facing headwinds, with several major players like Burberry and Tiffany also reporting declines in key markets. The situation in Hong Kong and Japan remained a significant concern, and investors were closely watching how luxury brands would adapt to these challenges.