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Tag: Kering SA

  • Richemont Revenue Beats Estimates on Japan, Europe Demand

    Richemont Revenue Beats Estimates on Japan, Europe Demand

    Richemont, the world’s biggest jewelry maker, said sales growth accelerated as weaker currencies attracted big-spending tourists to Japan and Europe, spurring the stock’s steepest intraday gain in more than two years.

    Sales increased 4 percent excluding currency shifts in the five months through August, the Geneva-based company said in a statement Wednesday. Analysts expected a 1 percent gain, according to the median estimate in a Bloomberg survey. The shares climbed as much as 7.5 percent.

    Sales rose 48 percent in Japan and 26 percent in Europe, offsetting an 18 percent decline in Asia-Pacific. The results mirror comments by peers in the luxury business, such as Hermes International SCA, which reported higher first-half sales, fueled by an acceleration in Japan. LVMH Moet Hennessy Louis Vuitton SE in July posted strong revenue growth in Europe and the U.S., which helped offset a decline in China, Macau and Hong Kong.

    “Japan and Europe more than compensate for the weak development in Hong Kong,” said Rene Weber, an analyst at Bank Vontobel AG in Zurich. “The strong performance of those markets mean the Swiss watch industry can weather the Asian weakness, at least this year.”

    Shares in the Swiss owner of the Cartier jewelry brand, whose full name is Cie. Financiere Richemont SA, rose 6.4 percent to 76.65 francs as of 11:40 a.m. in Zurich. The report bolstered shares in the luxury-goods industry, with Hermes up 4.8 percent and LVMH gaining 3.5 percent.

    Richemont said sales in Hong Kong and Macau were “significantly lower,” while mainland China returned to growth with retail sales growing at a “strong double-digit rate.” The company reports five-month sales figures each year on the day of its annual meeting with shareholders.

    “Part of the crisis in confidence in the watch industry in Asia-Pacific is fragile confidence by independent retailers amid the problems in Hong Kong and Macau,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich, adding that Richemont’s comments about China were reassuring.

    Still, Richemont said its wholesale business continues to be weighed down by weakness in the Asia-Pacific region, which is still “extremely challenging.”

    Luxury spending in Hong Kong has been suffered since late 2012 when the Chinese government has been discouraging exuberant spending among officials. Political protests in Hong Kong last year forced some stores to shut and weighed on tourism.

    Among other luxury stocks, Swatch Group AG, the maker of Omega watches, rose 3 percent, and Kering SA, which owns Gucci, rose 4.4 percent.

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  • Gucci tangles with Hong Kong landlords

    Gucci tangles with Hong Kong landlords

    Retailers such as Burberry Group Plc, Kering SA and Chow Tai Fook Jewellery Group Ltd. are pushing landlords to lower rents on existing properties as luxury brands scale back on declining traffic.

    Commercial rents have dropped the most this year since 2009 amid plummeting sales.

    Hong Kong’s Russell Street in Causeway Bay used to boast the world’s highest retail rents, but it relinquished the top post to New York’s Fifth Avenue last year, Bloomberg News reported.

    TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.

    Kering, owner of the Gucci brand, has also warned that it may close some of its shops in Hong Kong if rents don’t come down.

    “Many landlords have not necessarily understood that the markets have changed,” Kering chief financial officer Jean-Marc Duplaix was quoted as saying.

    China’s economic slowdown and President Xi Jinping’s austerity and anti-corruption campaigns are among the reasons for the declining number of mainland shoppers in the city.

    Demand has also plunged because the weaker yen and euro have prompted Chinese tourists to favor Japan and France over the city, the news agency said, citing Helen Mak, senior director of research at Colliers International.

    “Unavoidably rents will trend down,” said Marcos Chan, head of research for Hong Kong, Macau and Taiwan at CBRE Group Inc. “We don’t see any reason why retail will quickly see a rebound any time soon.”

    Sales of jewelry, watches and other high-priced gifts fell 15.9 percent in the year ending June, according to data from the Hong Kong Retail Management Association.

    In a July research report, Jones Lange LaSalle Inc. said high-street rents will drop 15 percent to 20 percent this year, which is far worse than the 5 percent drop it predicted at the end of last year.

    Street-level landlords in Central on Hong Kong Island, and across the harbor in Kowloon neighborhoods that cater to mainland shoppers, are also feeling the pressure.

    Average rents fell 15 percent in Tsim Sha Tsui in the first half, Colliers said.