Richemont Urges Caution Despite Improved Economy

Bridal jewelry did not save U.S. sales

Sales by Richemont in the April-August period suffered a 16 percent year-over-year drop, mostly due to a 36 percent decline in sales in the Americas, Executive Chairman Johann Rupert is expected to tell a shareholders meeting on Wednesday. Jewelry sales fall 14 percent.

Sales in the Asia- Pacific region grew by 5 percent although sales in Japan were down 7 percent. European sales were 22 percent lower, including the Middle East, which is still growing.

The luxury group’s retail business, through its own stores, has fared reasonably well, declining 7 percent from last year. Its wholesale business, however, fell by 21 percent, which largely reflects de-stocking by retailers, most notably in the Americas.

Sales by the Jewellery Maisons fell by 14 percent, while those by the Specialist Watchmakers declined 18 percent.

Rupert warned that despite continuing cost-control measures, Richemont’s profitability for the first six months of the year “will inevitably be significantly below” last year’s. “Although the rate of decline in sales is slowing, we still urge caution.”

“We would prefer to wait until we have more evidence of a broader economic recovery before speculating on the likelihood of a better second half, particularly when it comes to the wholesale business.”

Richemont’s interim results for the six-month period to September 30, 2009 will be released in November.