For Richemont, Strong U.S. Q1 Sales Offset Slump in China

FinancialsJul 15, 2022

For Richemont, Strong U.S. Q1 Sales Offset Slump in China

Its jewelry houses, which include Cartier and Buccellati, posted double-digit growth.

Richemont headquarters in Geneva, designed by architect Jean Nouvel. The company posted a 20 percent increase in revenue in its first quarter. (Image courtesy of Richemont)
Geneva—Richemont kicked off its fiscal year on a high note, posting double-digit sales growth.

The luxury conglomerate, which owns high-end brands like Cartier and Van Cleef & Arpels, recorded sales growth across all channels.

Its strong performance in the Americas, Europe, Japan, the Middle East and Africa offset lower sales in Asia-Pacific, particularly in China.

Here are five key takeaways from its earnings report released Friday.

Richemont started the year off strong.

For the first quarter ending June 30, Richemont posted sales of €5.26 billion ($5.29 billion), a 20 percent year-over-year increase at actual exchange rates.

Its growth was led by retail, with sales up 26 percent year-over-year. Retail sales now account for 58 percent of the company’s total sales, up from 55 percent last year.

Wholesale sales were up 12 percent for the year.

Online retail sales also grew 12 percent, bolstered by strong growth among its jewelry and watch brands.

Richemont did not provide fiscal guidance for the year ahead.

Jewelry sales thrived in spite of a poor performance in China.

Richemont has several well-established jewelry brands on its roster, including Cartier and Van Cleef & Arpels.

Despite a slump in sales in China due to COVID-19 lockdowns in April and May, sales at its jewelry houses did well in the first quarter, which Richemont attributed to strong retail sales.

Sales in Richemont’s jewelry division were up 20 percent in the first quarter, reaching €3.02 billion ($3.03 billion).

Jewelry and watch sales at Buccellati, Cartier and Van Cleef & Arpels were especially strong.

Jewelry sales progressed in all regions and channels, said Richemont, except the Asia-Pacific region and in wholesale.

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Luxury watch sales ticked higher.

Richemont also has several luxury watchmakers in its portfolio, including A. Lange & Söhne, IWC Schaffhausen, Officine Panerai, and Vacheron Constantin.

Sales in Richemont’s watch division were up 18 percent to €1 billion ($1.01 billion).

The growth was driven by both online and in-store retail sales, said the company.

“Growth was achieved in most maisons and regions with an ongoing outperformance of A. Lange & Söhne, Panerai and Vacheron Constantin,” said Richemont.

The U.S. was Richemont’s largest market in Q1.

Richemont’s sales growth in the quarter was bolstered by double-digit increases in Europe, the Americas, and Japan.

In the Americas, sales were up 25 percent year-over-year, driven by strong domestic spending.

The United States was Richemont’s largest market in Q1, accounting for 22 percent of group sales.

Sales in Europe were up 42 percent, buoyed by domestic demand as well as a return of tourists, particularly those from the Americas and the Middle East.

France did especially well, with sales climbing triple digits in the quarter.

The Asia-Pacific region posted the weakest performance due to COVID-19 lockdowns in China in April and May. Sales in mainland China fell 37 percent in the quarter.

However, the other Asian markets, including Singapore, South Korea and Thailand, performed well and somewhat offset the decline to 15 percent overall for Asia-Pacific.

Japan put on the strongest regional performance of all, posting 83 percent sales growth. Sales in the Middle East and Africa were up 6 percent.

Richemont maintained its focus on sustainability initiatives.

Richemont published its annual sustainability report last month, outlining its ESG performance for the year.

“We have continued to accelerate our sustainability efforts throughout FY2022, delivering against our short-, medium- and long-term goals,” said Chief Financial Officer Burkhart Grund.

In February, the company appointed Bérangère Ruchat as its chief sustainability officer and board member Jasmine Whitbread was appointed to chair the Governance and Sustainability Committee.

“With the arrival of Bérangère Ruchat and Jasmine Whitbread, we are stepping up our sustainability focus and laying the foundations that will drive best-in-class environmental and social progress across our operations and supply chains,” said Grund.

Its goals include a commitment to 100 percent renewable electricity across all its sites by 2025. It’s currently at 92 percent renewable electricity, a 28 percent improvement compared with 2019.

The full report can be read here.

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