Richemont slows down in Q2 2023

While the revenue for the first half of its fiscal year 2023/2024, which ended in late September, showed a 6% increase compared to the previous year at 10.22 billion euros, analysts were expecting 10.34 billion euros. The semi-annual profit, on the other hand, is 1.51 billion euros, a result that disappoints those who were relying on the 2.17 billion recommended by analysts.

The slowdown primarily affected the second quarter. The reasons include the highly unstable international geopolitical situation, inflation, which slowed down almost all markets, particularly North America (where sales decreased by 4%), and economic growth that didn't materialize as expected in several sectors.

Johann Rupert, the Chairman of Richemont's Board of Directors, explained in a press statement that the best performances were achieved by the high jewelry houses (Cartier, Van Cleef & Arpels, and Buccellati): sales in this segment are up by 10%. However, the results for the watchmaking brands are less enthusiastic, with a 3% decrease for the year and a total of 2 billion euros.

Johann Rupert attributes the positive surge in jewelry to enhanced communication and investments in craftsmanship. Good performances are notable in Asia, where sales have increased by 14%.

The semi-annual figures falling below expectations temporarily impacted Richemont's stock performance: on Friday, the share price experienced a drop when the results were published. Nevertheless, the strength of available cash flow helped maintain investor confidence.

Johann Rupert had already warned in September that inflation would impact the demand for luxury goods in the coming months. The predictions of the South African billionaire have proven accurate. However, he remains confident about the future. The new momentum provided by the reopening of the Chinese market and the resilience of its houses allows Richemont to anticipate a more positive next semester.