LONDON A waning appetite for luxury and growing macroeconomic pressures dented Richemont’s growth in the first six months of the year, with sales climbing 6 percent to 10.2 billion euros, and profit from continuing operations up 3 percent to 2.7 billion euros.

At constant exchange rates, sales in the six months to Sept. 30 were up 12 percent.  

That growth was bolstered chiefly by the jewelry division, where sales rose 10 percent at actual rates. Sales in the watch division were down 3 percent, while the other businesses division, which includes fashion and accessories, rose 1 percent.

In the key Asia-Pacific region, sales were 14 percent higher than during the corresponding period last year, while in the Americas region, they contracted by 4 percent.

Johann Rupert, founder and chairman of Compagnie Financière Richemont, said that while the first half had started strongly and “beyond our expectations,” growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment.

Those headwinds were made worse by strong comparatives with the same period last year, he added.

“Consequently, we have seen a broad-based normalization 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,” Rupert noted.

He was positive about the future, adding that Richemont had maintained “financial discipline” during the first six months, allowing for targeted investments and a further strengthening of operations.

“Our solid balance sheet enables us to manage for the long term, investing in a discerning manner in talent, research and development, production, distribution and sustainability initiatives. I have every confidence in the long-term prospects of our group,” Rupert said.

Analysts have widely been anticipating a slowdown in luxury generally, and at Richemont specifically. 

As reported, last month RBC downgraded Richemont’s share price target to 130 Swiss francs from 170 Swiss francs for the next 12 months based on new, lower earnings estimates.

For fiscal 2024, the current financial year, the bank reduced Richemont’s revenue estimate by 2 percent and EBIT, or earnings before interest and taxes, by 5 percent. 

The bank said that Richemont could be particularly vulnerable to the normalization in luxury spending given the higher price points of fine jewelry “and, arguably, the higher feel-good factor required” to purchase it.

Richemont, owner of brands including Cartier, Van Cleef & Arpels and IWC, had already begun to feel the impact of waning demand and the increasingly brutal macro environment earlier this year. 

Following Richemont’s first-quarter results announcement in July, shares closed down more than 10 percent at 137.90 Swiss francs after the luxury goods giant reported a 2 percent contraction in sales in the key Americas region, and a miss on projections in Asia Pacific.

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