Richemont expects weaker half-year earnings after restructuring costs

The Luxembourg-and JSE-listed group said in a statement that the decline reflected the effect of one-off restructuring charges of about €65m, and the additional effect of inventory buybacks.

“We are of the view that the current negative environment as a whole is unlikely to reverse in the short term. However, we remain convinced of the long-term prospects for luxury goods globally and in particular for watches and jewellery,” it said.

Sales in the five months to August dropped 13% at constant exchange rates and 14% at actual rates.

Richemont said sales in the UK had shown growth since the weakening of pound against most currencies at the end of June following the EU referendum.

Elsewhere in Europe, sales were down, particularly in France, due to a significantly lower level of tourist activity.

There was positive momentum in both jewellery and accessories in the Americas, but an overall decline in sales due to a weaker performance in watches.

In the Asia-Pacific region, growth in mainland China and Korea was more than offset by the continuing weakness of the Hong Kong and Macau markets.

Retail declined overall, primarily due to Europe and Japan. All other regions’ sales declines were low single digits, supported by jewellery and accessories. The marked decrease in wholesale sales reflected the continuing negative trend and the watch inventory buybacks.

Richemont’s other businesses reported sales growth, thanks to positive performances at Montblanc, Chloé, Azzedine Alaïa and Peter Millar.