China’s luxury watch market is on a bit of a roller coaster lately.
Richemont, the world’s second-largest luxury group after France’s LVMH, announced slower sales growth in the third quarter hampered by a weaker Asia.
Sales in the Asia-Pacific region were flat year-on-year on a constant currency basis, but up 6.2 percent to $1.46 billion at actual exchange rates in the quarter ending Dec. 31. For the nine months, Asia-Pacific grew by 16.3 percent at actual exchange rates, and 6 percent at constant exchange rates.
The company had 11 consecutive quarters of double-digit increases, but its fortunes in Asia turned quickly. In the first half of this year, sales in the Asia region grew 22 percent.
“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,” Richemont said in a statement.
Reason behind this Asian slowdown?
Analysts suggest several reasons: a later start to the Chinese New Year, which begins on Feb. 10, compared with Jan. 23 last year; softer watch sales at wholesale in the region; and sales didn’t materialized from improved consumer sentiments after the Chinese political leadership change.
In Europe, sales rose by 11 percent, helped by Chinese tourists.
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 said.
One thing is clear, Chinese customers comprise approximately 25 percent of global luxury spending according to a HSBC Global survey and what Chinese consumers do is of great concern for luxury companies like Richemont.
Richemont owns some of the world’s most prestigious brands including Cartier, Montblanc, and Baume & Mercier. Most of its watches are priced in the $5,000 to $10,000 range.
photo credit: phong quach