Luxury group Richemont beats sales forecasts as China improves

Cartier-owner Richemont on Thursday reported an 11 percent increase in constant currency sales during its third-quarter, beating expectations, as high-end jewellery demand continued to increase and China improved.

The world's second-largest luxury company, whose brands also include Van Cleef & Arpels and Buccellati, said its sales from September to December increased to 6.40 billion euros (HK$58.06 billion) from 6.15 billion euros a year earlier.

The figure beat an analyst consensus of 6.28 billion euros ($7.31 billion) cited by Visible Alpha, although it was a slight slowdown from the 14% rate of organic growth the previous three months.

Jewellery led the way for Richemont, with sales up 14 percent during the period, while its watchmaking business - which includes the IWC and Jaeger-LeCoultre brands - saw sales rise 7 percent.

Richemont's trading update provides the first clues on demand for luxury goods in a new year that has been marked so far by more geopolitical turmoil and the bankruptcy of one of the sector's largest retail groups, Saks Global.

LVHM is due to report its annual results later this month, followed by Hermes and Kering in February. Smaller Italian cashmere brand Brunello Cucinelli was the first luxury brand to report quarterly sales this week.in February. Smaller Italian cashmere brand Brunello Cucinelli was the first luxury brand to report quarterly sales this week.

Richemont's sales in Asia excluding Japan, its most important regional market, rose by 6 percent organically, slightly above analyst expectations of around 5 percent.

That market is dominated by China, luxury's main growth engine in recent years, where a sticky real estate crisis and a shift in consumer appetite is weighing on Western brands.

"Sales in China, Hong Kong and Macau combined were up by 2 percent, mostly led by solid activity in Hong Kong," Richemont said. It was the company's second consecutive positive quarterly reading from China.

"Growth was robust elsewhere in the region, with noteworthy performances in the South Korean and Australian markets," the company added.

Reuters