Richemont is steeling itself for a tough few months ahead after “weak demand” for the watches it produces took the gloss off its latest financial results.
Third quarter sales for the three months to the end of December fell 4% at constant exchange rates (but increased 3% at actual rates) as the company saw business toughen in key markets.
One highlight was the growth of its jewellery business, which it said “partly compensated” for the reversal in watch sales during the quarter.
Overall, sales of watches slipped 4% to €826m (£630m) in the three-month period, despite it coinciding with Christmas. Watches are currently worth around half the size of Richemont’s jewellery business.
“Compared to the first six months of the current year, the slowdown in sales largely reflected weak trading in Europe. Trading in the Asia Pacific region continued to be challenging,” said the company, whose brands include Cartier, A. Lange & Sohne, Jaeger-LeCoultre and Vacheron Constantin among others.
Overall revenues at the group reached €2.92 billion (£2.22) billion compared to €2.83 billion (£2.15 billion) in the same period last year.
Richemont said lower levels of tourism in Europe were one of the main reasons for the decline in the third quarter versus the first six months of the year, while it was also left to lament a “continued contraction” in watch demand in Asia-Pacific.
A similar pattern ensued in the Americas, where it revealed jewellery growth partially offset “soft demand” for watches.
Bosses remarked that the slowdown in its global watch business reflected caution in the wholesale channel, most notably in Hong Kong, Macau and the Americas.
It added warned investors that the “challenging trading environment” was likely to prevail in the final quarter of its financial year, ending March 31.