Richemont third-quarter sales hit by weak watch demand in Hong Kong

ZURICH, Switzerland - Cartier owner Richemont said weak luxury watch demand in Hong Kong and Macau halted sales growth in the final quarter of 2014, echoing comments by luxury peers this week.

Swiss watchmakers are grappling with sluggish sales in mainland China, where consumers are no longer spending as much on luxury timepieces, and a downturn in Hong Kong which has been shaken by pro-democracy protests. The region accounts for about a quarter of Richemont's sales.

"The decline in sales by the group's specialist watchmakers reflected both caution on the part of business partners in the wholesale channel and a lower performance of some retail locations, most notably in Hong Kong and Macau," the maker of IWC and Jaeger-LeCoultre watches said in a statement on Thursday, abstaining from giving any kind of outlook.

Earlier this week, British luxury brand Burberry said a fall in sales in Hong Kong in the final quarter of 2014 could hit full-year profitability, and U.S. jeweller Tiffany also cut its profit forecast for 2014, citing a disappointing holiday shopping season and further weakness in Japan.

Sales growth was flat in constant currencies in Richemont's third quarter to Dec. 31, just below an estimate for 1 percent growth in a Reuters poll. On a reported basis, sales increased 4 percent to 3.051 billion euros ($3.59 billion).
While sales in the Asia Pacific region and at the group's watch brands declined in the quarter, Europe benefitted from a return of tourist shoppers and the Americas still reported good growth. Demand for jewellery also stayed strong, Richemont said.

"It is slightly below expectations with Europe as a positive surprise but Asia-Pacific worse than expected. The Hong Kong situation really hurts," Vontobel analyst Rene Weber said.

€1 = $1.17/£0.77