World Footwear


Richemont: quarter sales down by 47%

Jul 16, 2020 Switzerland
Richemont: quarter sales down by 47%
During the quarter under review, the group’s trading and operations were strongly impacted by Covid-19 and sales contracted significantly across all regions, channels and business areas, notwithstanding a 49% increase in China
Performance reflected unprecedented levels of disruption and widespread temporary closures of internal, franchise or multi-brand retail partner stores, as well as the closure of Online Distributors’ fulfilment centres. The pandemic affected regions to varying degrees, depending on the duration of closures, reliance on tourist spending and the ‘feel good factor’ of their domestic demand.

In Europe, sales were 59% lower than in the prior year period, with all markets impacted by public health protection measures, as well as subdued local demand and a lack of international tourism when stores gradually reopened during the quarter. Sales in Asia Pacific were the most resilient. The 29% sales decrease across the region reflected declines across all markets, with the exception of China, which delivered triple digit online sales growth and very strong domestic retail sales in the absence of overseas purchases from the Chinese clientele from the mainland. Sales in the Americas contracted by 61%, with business areas impacted significantly by the temporary store and distribution centre closures. In Japan, sales declined by 64% as stores were closed for most of the quarter under review. The year-on-year sales decline in the Middle East and Africa was contained to 38%, partly reflecting the recent internalisation of operations in the Kingdom of Saudi Arabia as well as advanced purchases in anticipation of the Kingdom’s VAT increase on the 1st of July.

Retail and wholesale sales decreased by 43% and 65%, respectively, due to temporary store closures, severely reduced tourism and generally weak consumer sentiment. Retail sales were lower across geographies, with the exceptions of strong increases in China and the local South Korean market. Online retail sales decreased by 22%, largely due to the temporary closure of the Online Distributors’ fulfilment centres, following strong double-digit growth in the comparative prior year period. Quarterly online retail sales exceeded wholesale sales in the period, reaching 25% of group sales compared to 17% in the prior year period. Excluding Online Distributors, the contribution of online sales rose to 8% of group sales from 2% in the prior year period, fuelled by strong demand across all business areas.

The 41% decrease in sales at the Jewellery Maisons reflected lower sales across all product lines and regions, with Asia Pacific recording a lower rate of decline than the business area average. In China, sales increased by 68% over the period. This was particularly driven by increased online and offline retail spend and the contribution of the recently opened Cartier flagship store on Tmall Luxury Pavilion. Sales at the Specialist Watchmakers decreased by 56% due to the aforementioned negative factors, accentuated by a strong reliance on multi-brand retail partners, a comparatively low exposure to China and low online retail penetration worldwide. During the quarter, the Specialist Watchmakers launched a number of online initiatives and participated in the Watch Show on the Cloud to introduce their creations to the Chinese market. Online Distributors recorded a 42% sales decline as a result oftemporary distribution centre closures and a highly competitive pricing environment. The Group’s other businesses posted a 59% sales reduction, with all Maisons impacted by temporary store and distribution centre closures.

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