Retail in Asia


Richemont latest luxury giant to suffer from global sales slowdown even as Asia rallies

Richemont reported a 6 percent uptick in sales for the first half of 2023, as the Swiss firm became the latest luxury company to highlight increased caution by big-spending customers in recent months.

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The owner of Cartier, Chloé, and Yoox Net-a-Porter (YNAP), said sales increased across all regions during the six months ending September 30, except for in the Americas.

Half-year growth was led by Asia Pacific, where sales rose by 14 percent, fuelled by a 23 percent progression in mainland China, Hong Kong and Macau combined, following the removal of Covid-related restrictions at the start of the year and the related resumption of travel. However, APAC growth slowed considerably compared to the first quarter ending June 30, where the region clocked a whopping 40 percent increase in sales.

Most channels recorded sales growth, with the group’s directly-operated store network posting the strongest growth rate at 9 percent and now accounting for 69 percent of total sales.

While online retail sales, which exclude sales made by YNAP, declined by 7 percent, direct-to-client sales made up close to three quarters of group sales. Meanwhile, sales in the wholesale channel grew by 1 percent, reflecting the positive performance in Asia Pacific, said Richemont.

By category, growth was led by the firm’s jewellery maisons, made up of Buccellati, Cartier and Van Cleef & Arpels, where sales increased by 10 percent. Sales among the specialist watchmakers, namely A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, and Jaeger-LeCoultre, were down 3 percent, while Richemont’s other business area, including Watchfinder, declined by 1 percent. Sales at its fashion and accessories maisons, comprising Chloé, Alaïa, AZ Factory, Delvaux, Dunhill, and Montblanc were broadly in line with the prior-year period, while discontinued operations, namely YNAP, recorded a 13 percent contraction in sales.

“The period under review started strongly, beyond our expectations. However, growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment, compounded by strong comparatives. Consequently, we have seen a broad-based normalisation of market growth expectations across the industry. The positive news is that a soft-landing scenario seems to be prevailing in major economies with still higher growth expected from China, which should benefit from stimulus measures,” said Johann Rupert,
chairman, Richemont.

“We have further reinforced the breadth and depth of the skillset both on our Senior executive committee and the board. Our maisons have continued to enhance their desirability and capabilities and increase proximity with their clients. Financial discipline has been maintained enabling targeted investments and a further strengthening of our operations.”

Last month, luxury giants LVMH and Kering reported a slowdown in total sales for the third quarter ending September 30, along with Italy’s Salvatore Ferragamo, with the trio noting a slower-than-expected spend by luxury consumers, including in Asia.