Covid-19 impact reduces Richemont's Q1 sales by 47 percent

During the first quarter under review, the Richemont Group’s trading and operations were strongly impacted by Covid-19 resulting in sales decline of 47 percent at constant and actual basis to 1,193 million euros (1,360 million dollars). The company said in a statement that sales contracted significantly across all regions, channels and business areas, notwithstanding a 49 percent increase in China.

Compagnie Financière Richemont SA added that performance reflected unprecedented levels of disruption and widespread temporary closures of internal, franchise or multi-brand retail partner stores, as well as the closure of Online Distributors’ fulfilment centres.

Richemont Q1 sales decline in all core markets

In Europe, sales were down 59 percent to 436 million euros (497 million dollars), with all markets impacted by public health protection measures, as well as subdued local demand and a lack of international tourism when stores gradually reopened during the quarter. Sales in Asia Pacific declined 29 percent to 1,013 million euros (1,155 million dollars) reflecting declines across all markets, with the exception of China, which delivered triple digit online sales growth and very strong domestic retail sales in the absence of overseas purchases from the Chinese clientele from the mainland.

Sales in the Americas contracted by 61 percent to 277 million euros (315.7 million dollars), with business areas impacted significantly by the temporary store and distribution centre closures. In Japan, sales declined by 64 percent to 112 million euros (127.7 million dollars), as stores were closed for most of the quarter under review. The year-on-year sales decline in the Middle East and Africa was contained to 38 percent to 155 million euros (176.7 million dollars), partly reflecting the recent internalisation of operations in the Kingdom of Saudi Arabia as well as advanced purchases in anticipation of the Kingdom’s VAT increase on July 1, 2020.

The company added that retail and wholesale sales decreased by 43 percent and 65 percent to 1,052 million euros (1,199.5 million dollars) and 435 million euros (496 million dollars), respectively, due to temporary store closures, severely reduced tourism and generally weak consumer sentiment. Retail sales were lower across geographies, with the exceptions of strong increases in China and the local South Korean market. Online retail sales decreased by 22 percent, largely due to the temporary closure of the Online Distributors’ fulfilment centres, following strong double digit growth in the comparative prior year period. Excluding Online Distributors, the contribution of online sales rose to 8 percent of group sales from 2 percent in the prior year period, fuelled by strong demand across all business areas.

Richemont reports strong drop in sales across product categories

The company further said that 41 percent decrease in sales to 1,083 million euros (1,234.8 million dollars), at the Jewellery Maisons reflected lower sales across all product lines and regions, with Asia Pacific recording a lower rate of decline than the business area average. In China, sales increased by 68 percent over the period driven by increased online and offline retail spend and the contribution of the recently opened Cartier flagship store on Tmall Luxury Pavilion.

Sales at the Specialist Watchmakers decreased by 56 percent to 359 million euros (409.3 million dollars), while Online Distributors recorded a 42 percent sales decline to 356 million euros (406 million dollars), as a result of temporary distribution centre closures and a highly competitive pricing environment. The group’s other businesses posted a 59 percent sales reduction to 204 million euros (232.6 million dollars), with all maisons impacted by temporary store and distribution centre closures.

Image credit:Olaf Tamm Hamburg Germany for Richemont