The Richemont Group's jewelry houses sales for the three months ended 31 December 2008, at US$1.06 billion compared to US$1.15 billion in the final quarter of 2007, fell by 12 percent. Cartier reported lower sales and Van Cleef & Arpels, following very strong growth earlier in the year, saw marginally lower sales.
Group sales during the quarter were 7 percent lower than in the prior year with underlying sales decreasing by 12 percent at constant exchange rates. All regions reported lower underlying sales, although positive exchange rate effects resulted in modest growth at actual exchange rates in the Asia-Pacific region and in Japan.
The trend worsened over the quarter, with sales in December 12 percent lower than the prior year at actual exchange rates. The Group's sales in the United States were down by 24 percent in euro terms in December.
The sales decrease in the important third quarter of the financial year follows sales growth in the first six months of 10 percent. Consequently, overall sales for the nine months ended 31 December 2008 increased by 3 percent at actual exchange rates.
"For some years now we have expressed our concerns about global financial stability. We feared and cautioned that wrongly priced credit could lead to a global crisis. The full extent to which the financial sector assumed known and, more importantly, unknown and unquantifiable risks is fast becoming apparent. This excess leverage, assumed over many years and at the instigation of many activist shareholders and investment bankers, now has to be unwound with panic measures and unseemly haste. Thus, since October, the real economy has begun to experience dramatic repercussions from the financial crisis. Demand for luxury goods, as in other sectors of the economy, has fallen dramatically and Richemont is currently facing the toughest market conditions since its formation 20 years ago," says a spokesman for the company.
"Given the current economic climate and the uncertainties facing us, we see no cause for optimism. We must assume that there will be no significant recovery in the foreseeable future and plan accordingly to cope with this situation. Fortunately your company has acted conservatively. We have a strong balance sheet and maisons that have withstood several depressions and wars over the centuries. Management is committed to take the necessary steps to not only see the difficult times through but to emerge stronger," continues the spokesman.
Richemont holds a portfolio of several of the most prestigious names in the luxury goods industry including Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, Alfred Dunhill and Montblanc.
Richemont experienced an 8 percent decrease in sales in Europe at actual exchange rates, reflected the deepening recession in Western European markets.
Sales in the Asia-Pacific region represented 25 percent of Group sales during the quarter. The region saw sales growth at actual exchange rates, albeit at a lower rate than that seen over the last 3 years. Sales in mainland China increased by 24 percent at constant exchange rates during the period. Sales in the Middle East continued to grow.
The decline in consumer confidence had a significant impact on sales in the Americas region. A 28 percent decrease in sales at constant exchange rates was only partly offset by positive exchange rate movements.
The Japanese market for luxury goods generally continues to decline. Flat sales in euro terms reflected significant positive exchange rate movements. In yen terms, the value of sales decreased by 18 percent.