Time may be up for the post-pandemic luxury goods boom, as Richemont, the Swiss business behind brands such as Cartier, Vacheron Constantin and Alfred Dunhill, revealed a sharp slowdown in growth today.
Sales of high-end clothes and accessories soared in the past year, fuelled in part by pent-up demand among wealthy Asian shoppers as countries such as China loosened their Covid restrictions.
Today, Richemont revealed that while sales were still climbing, crossing the €10 billion mark for the six months to 30 September, growth had slowed to 5% over the summer, compared to 19% in the three months to 30 June. Profit came to €1.5 billion.
While jewellery continued to grow, sales of watches declined, though Richemont noted that its highest-end watch brands like Vacheron, which makes timepieces that sell for six-figure sums, performed better.
Chair Johann Rupert said: “The period under review started strongly, beyond our expectations. However, growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment, compounded by strong comparatives.
“Consequently, we have seen a broad-based normalisation of market growth expectations across the industry. The positive news is that a soft-landing scenario seems to be prevailing in major economies with still higher growth expected from China, which should benefit from stimulus measures.”
Victoria Scholar, head of investment at interactive investor said: “The disappointing performance at Richemont echoes a similar slowdown in performance at French rival LVMH. The weak global macro backdrop with rising interest rates, elevated inflation and China’s bumpy recovery are weighing on demand for luxury goods, particularly watches at Richemont.
“Luxury was a market winner at the start of the year, but the sector’s glow is now fading as even the aspirational, higher end customers feel the squeeze with spending on the decline as belts tighten.”
Shares lost 6.5% to CHF105.20 (£96.26).
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