The owner of Cartier and Montblanc, and the world’s largest jewelry maker, Richemont, announced that its first half earnings fell on stagnant demand for its products in Asia.
In the six months through September, sales in China fell 4 percent, compared to a 10 percent decline last year, reports Bloomberg. Operating profit fell 4 percent to 1.31 billion euros ($1.6 billion).
One of the biggest obstacles for Richemont during this earnings cycle were the Hong Kong protests. Hong Kong is the company’s biggest market, which accounts for 18 percent of overall sales, a figure higher than many of its rivals, according to Reuters. Sales in mainland China and Hong Kong together account for approximately 25 percent of group sales.
First half sales had risen 4 percent, excluding currency effects, then declined 1 percent in October due to the democracy demonstrations.
Overall, first half revenue from jewelry rose 10 percent, though revenue from watches declined 1 percent. Watches account for close to half of Richemont’s sales, whereas jewelry accounts for approximately one third of its business.
CFO Gary Saage said, “Cartier’s jewellery business continues to do extremely well so we can be relaxed. (Watches) are not great, should be better, but overall Cartier is fairly resilient and when Cartier is resilient, Richemont is resilient.”
Despite Saage’s words of optimism, the company is cutting costs through a hiring freeze and put 230 employees at one of its watch factories on shortened workweeks in September.
image source: montblanc