Richemont profit slumps on weak China demand for luxury watches

Demand for luxury watches is also falling after producers raised prices during a pandemic-era boom.

Richemont reported a slump in profit in the first half as the Swiss luxury group’s watchmaking division suffered from cooling demand in China.

The Cartier owner reported €2.2 billion ($2.37 billion) in operating profit as sales at constant currencies were stable for the six months through September. Analysts expected operating profit of €2.47 billion and sales growth of 1%.

Richemont, which also owns watchmaker Vacheron Constantin and jewelry house Van Cleef & Arpels, is among luxury goods makers affected by skittish consumers in China. Demand for luxury watches is also falling after producers raised prices during a pandemic-era boom.

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With about 70% of revenue coming from its branded jewelry division, Richemont shares have outperformed most luxury rivals and the Swiss stock market, rising about 15% in the past year.

Richemont — controlled by South African billionaire Johann Rupert — named Nicolas Bos, who boosted sales at Van Cleef, as group chief executive officer in May. The company also said the former head of Vacheron Constantin, Louis Ferla, would take over running Cartier, the French jewelry maker that is Richemont’s top selling brand.

The Swiss group in October said it agreed to sell its e-commerce business Yoox Net-A-Porter to Germany’s Mytheresa for a one-third equity stake in the luxury online retailer. The deal to offload the loss-making business came nearly a year after a plan to sell YNAP to Farfetch fell apart.

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