Richemont operating profit grows, HK revenue falls by 10pc

Business | 8 Nov 2019 2:51 pm

Richemont reported half-year earnings that missed analysts’ estimates as protests in Hong Kong weighed on sales of IWC and Cartier watches, Bloomberg reports.

Operating profit grew by 3 percent to 1.17 billion euros. Analysts expected 1.25 billion euros.

The drop in Hong Kong revenue exceeded 10 percent.  In the longer term, the city may no longer be such a key market for timepieces as demand increases in the U.S. and Japan, and as the price differential with luxury goods on the mainland diminishes.

Sales growth was led by jewelry, which is a crucial growth motor for Richemont. However, profitability at that business contracted as Richemont boosted marketing and renovated stores.

Earnings from watches declined as Richemont’s sales from wholesale partners dropped. Richemont has been more selective in who it sells timepieces to in an attempt to avoid gluts in inventory at watch retailers.

Richemont shares have gained by 29 percent this year, underperforming the 56 percent gain in LVMH.

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