Richemont full year broadly in line, April trends weak
today May 20, 2016
Cartier owner Richemont expects no improvement in the trading environment after underlying sales growth slowed further in the final quarter of its fiscal year and April sales fell 15 percent, hit by weak demand for watches in Hong Kong and Europe.
Luxury watch makers are grappling with poor demand from tourist shoppers in Europe, which is seeing fewer visitors following attacks in Paris and Brussels, and a downturn in their biggest market, Hong Kong.
Richemont, maker of IWC watches and Van Cleef & Arpels jewellery, said Asia Pacific remained weak in April due to no signs of recovery in Hong Kong and Macau.
This was "partially offset by continued improvement in mainland China, which was up 26 percent on a constant rate basis", the Geneva-based company said in a statement on Friday.
Net profit rose 67 percent to 2.23 billion euros ($2.50 billion), due to a 639 million euro gain relating to the merger of its Net-a-Porter business with Yoox last year and as a financial charge in the year-ago period was not repeated.
The average forecast of analysts polled by Reuters was 2.43 billion euros.
Richemont proposed a dividend of 1.70 francs per share for 2015/16, up from 1.60 francs last year.
Full-year sales fell 1 percent at constant currencies to 11.08 billion euros, showing a deterioration in the final quarter from the first nine months of the year and just lagging the poll's forecast for 11.15 billion. They were up 6 percent on a reported basis.
"It was expected to be bad but this is probably even worse with basically a more or less perfect storm of nearly all regions struggling and in watch product particularly," Kepler Cheuvreux analyst Jon Cox said, adding he expected the stock to come under pressure.
Richemont shares were indicated to open 6 percent lower in pre-market trading.
$1 = 0.8927 euros
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