Richemont First-Quarter Sales Slump Amid Virus Lockdowns

(Bloomberg) -- Richemont reported a slump in first-quarter sales as virus lockdowns around the world weighed on demand.

• Sales declined 47% on a currency-adjusted basis to 1.99 billion euros ($2.3 billion) in the three months through June. Analysts expected 2.13 billion euros.

Key Insights

• While all regions and business areas recorded double-digit declines, China provided a glimmer of hope with sales jumping almost 50% as consumers there shopped more on their home turf. The question is whether other markets have similar rebounds.
• Sales of timepieces in wholesale slumped, as the dire situation for third-party retailers got exacerbated. Richemont and other watchmakers have already been streamlining their retail network to make their products more scarce, and the coronavirus crisis could signify a death blow to some wholesale partners.
• The jewelry business fared better than watches and fashion and leather goods. Jewelry pieces are considered less seasonal, and investors often put money into gems and diamonds when stock markets reel.

Market Reaction

• Richemont shares have fallen 16% this year.

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