Luxury-goods conglomerate Richemont, which has seen a 20% rise in its share price on the JSE over the past six months, enjoyed brisk sales growth in its key Pacific-Asia markets for the first five months of the year to end-March 2018.

A trading statement released ahead of the annual meeting in Geneva on Wednesday showed Richemont’s total sales up 12% at constant exchange rates and 10% at actual exchange rates.

Richemont shares, which touched a 12-month low of R80 on the JSE about a year ago, were slightly weaker at the close of trading at R120. In a note to clients, FNB Securities said the update was better than expected, with growth significantly ahead of full-year expectations of about 4.6%.

Richemont owns a sprawling luxury brands portfolio that includes Cartier, Van Cleef & Arpels, A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Officine Panerai, Piaget, Roger Dubuis and Vacheron Constantin. The company also has a 49% stake in the Yoox Net-A-Porter Group, a listed online fashion retailer.

Richemont chairman Johann Rupert said the sales growth in the first five months was driven primarily by strong performance in the Jewellery Maisons. He said sales rose in all regions, led by Asia Pacific.

Rupert said the strong Asia Pacific performance was supported by double-digit increases in most markets — including China and Hong Kong, the two markets where a large chunk of Richemont’s inventory buy-backs were undertaken in the previous financial year.

Asia-Pacific sales were up a 23% at constant exchange rates and 22% at actual rates. Solid sales growth was also recorded in the Americas (up 9%) and Japan (up 11% at constant exchange rates and 6% at actual rates), but growth was more pedestrian in Europe (3%) as well as markets in Africa and the Middle East (2% at constant rates and 1% at actual rates).

Rupert said the 3% growth in Europe reflected contrasting performances within the region and the negative effect of a strong euro on tourist spending.

Sales grew at a double-digit rate in the UK with the help of favourable currency movements, while sales growth in Japan reflected higher domestic and tourist spending, he said. But sales growth in the Middle East was subdued, hampered by geopolitical uncertainties. In the sales channel breakdown, Richemont’s trading update disclosed that retail sales increased in most regions, with solid growth recorded in the Asia Pacific, Japan and the Americas markets.

The company said retail sales were driven by strong performances in specialist watchmakers and by the reopening of the Cartier flagship stores in New York and Tokyo a year ago.

Richemont said that the 11% increase in wholesale sales mainly reflected the effect of the inventory buybacks not recurring during the five-month trading period.

For the year to March 2017, Richemont posted sales of €10.6bn and operating profit of close to €1.8bn.


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