Compagnie Financiere Richemont SA announced on Thursday weaker sales growth as demand for its luxury watches dropped in Asia amid protests in Hong Kong.
The owner of Cartier, IWC and Piaget brands announced a revenue of €3.05 billion during the three months ended December 31, up 3.7% compared to an year earlier. However, excluding currency shifts, revenue was not changed, marking the first time in six years.
The jump was higher than the 3% increase during the third quarter of 2013, but still below analysts projection of €3.095 billion or 1.5% increase on a constant currency bases.
Geneva-based Richemont reported a 10% sales increase in Europe and another 14% jump in the Americas, however they were offset by a 5% decrease in Asia Pacific, the companys second-largest market. The region accounts for nearly one-third of Richemonts total sales, the company blamed “unfavorable basis of comparison and a difficult trading environment in most markets, primarily in Hong Kong and Macau,” for the decline.
“The decline in sales by the groups specialist watchmakers reflected both caution on the part of business partners in the wholesale channel and a lower performance of some retail locations,” Richemont said. Japan sales were also down, scoring a 2% decline year-on-year.
Fellow luxury watchmakers have also been hit by a slowdown in sales. Burberry, the British luxury fashion house, announced that sales decline in Hong Kong will most likely hurt full-year earnings. Tiffany, the US luxury jeweler, also reduced its profit forecast for 2014 due to weaker holiday shopping season.
Luxury stores in Hong Kong, the worlds biggest consumer of Swiss watches, were often closed as the citys downtown areas was overrun by crowds of people taking part in pro-democracy protests, which began on 26 September and ended on 15 December.
Richemont is one of the first companies to release their quarterly reports and the Swiss companys performance is often used as an indication for the overall condition of the industry.
Despite slowing sales, Richemont said net cast increased 14% to €4.9 billion. The company does not disclose profit figures in its interim reports.
Compagnie Financiere Richemont SA fell 2.63% on Wednesday and closed at CHF 88.70 in Zurich. The stock was down 0.85% on Thursday to CHF 87.95, marking a one-year decrease of 0.90%. The company is valued at CHF 46.30 billion.