Richemont stock in free fall after Asian slowdown

Cie. Financiere Richemont, the maker of luxury watches such as Cartier´s, has tasted the bitterest side of the golden Asian dream. The stock fell the most since 2011 after reporting a slowdown in its Asian sales and consequently missing

market´s expectations. This drop pulled down other luxury stocks such as Burberry, Prada or PPR, which closed lower.

The Swiss luxury watchmaker didn’t meet market expectations, as it missed the 2.86 billion euros total revenue estimated by seven analysts surveyed by Bloomberg. Sales rose 5 percent at constant exchange rates in the three months to end-December to 2.862 billion euros, falling shorter than the 7.6 percent rise forecasted in a Reuters poll. Revenue for the quarter rose 9.3 percent, also below expectations.

On the wake of the news, Richemont´s stock fell the most in four months in Zurich trading after reporting third-quarter revenue that missed analysts’ estimates due to the slowdown registered in Asia Pacific sales. Shares became major laggards of the composite index in Switzerland, dropping almost 6 percent, most notorious intraday slip since September 2011. It also dragged the South African benchmark index, just aided by industrial stocks.

“Following several years of exceptional growth in the Asia Pacific region, in particular China, sales were flat compared to the demanding comparative figures for the same quarter last year. While wholesale sales growth was lower than in the first six months and in the comparative period due to the cautious approach taken by the Group’s retail partners in Hong Kong and mainland China, boutique openings contributed to the positive trend in retail sales.” In this fashion explained Richemont its current situation in the Far East.

The company is however more satisfied with its European sales development for the quarter, as it revealed in a communication released on Monday. “In Europe, the performance was satisfactory: the growth in retail sales moderated during the quarter compared to the first six months of the financial year, whereas the wholesale trend seen in the first six months continued.”

Despite the slower growth reported, Richemont will continue to invest in the Asian markets, although remaining cautious. “At this stage, it is unclear how business patterns may develop and how the business in the Asia Pacific region will evolve in the near future. Richemont takes a long-term view in managing its business and will continue to invest in the development of its Maisons.”