LONDON – Sales at Compagnie Financière Richemont nearly halved in the first quarter to 1.99 billion euros, despite double-digit growth in China fueled by jewelry and fashion.
Sales fell 47 percent in the three months to June 30 due to store and workshop closures, anemic tourism and a lack of appetite for hard and soft luxury worldwide during the pandemic.
China was the outlier, growing 49 percent in the period. As a whole, the Asia-Pacific region was down 29 percent, with sales of 1.01 billion euros, and was Richemont’s largest market in the period. Richemont said that China delivered triple-digit online sales growth and “very strong” domestic retail sales as shoppers stopped spending abroad.
The owner of brands including Cartier, Van Cleef & Arpels, Dunhill and Chloé said in a trading update Thursday that its performance in the quarter reflected “unprecedented” levels of disruption and widespread temporary closures of internal, franchise or multi-brand retail partner stores, as well as the closure of fulfillment centers belonging to its online distributors such as Net-a-porter.
In Europe, sales fell 59 percent to 436 million euros, with all markets impacted by public health protection measures, as well as by subdued local demand and a lack of international tourism. In the Americas region, sales were down 61 percent to 277 million euros, while in Japan they fell 64 percent to 112 million euros.
The Middle East and Africa region fared slightly better, with sales falling 38 percent, partly reflecting advanced purchases in anticipation of Saudi Arabia’s VAT increase on 1 July.
Online retail sales fell by 22 percent, largely due to the temporary closure of fulfillment centers. Excluding online distributors such as Net-a-porter and Watchfinder, a platform for the sale of vintage and second-hand watches, online sales accounted for 8 percent of group sales, up from 2 percent in the prior year period.
Jewelry sales were down 41 percent, despite double-digit demand in China, where jewelry sales increased by 68 percent in the period. Richemont said that growth in China was fueled by increased online and offline retail spend and the contribution of the recently opened Cartier flagship store on Tmall’s Luxury Pavilion.
Sales at the specialist watchmakers were down 56 percent due to a strong reliance on multi-brand retail partners, a comparatively low exposure to China and low online retail penetration worldwide.
Richemont’s online retailers recorded a 42 percent sales decline as a result of temporary distribution center closures and a “highly-competitive” pricing environment. The group’s other businesses division, which include brands such as Dunhill, Chloé and Peter Millar, posted a 59 percent drop in sales due to store closures, the company said.