Richemont posts 67% drop in annual profit as coronavirus hits luxury sector

FILE PHOTO: High-end jewellery is displayed at a Cartier store on Place Vendome in Paris, France, July 2, 2019. REUTERS/Regis Duvignau/File Photo

ZURICH (Reuters) – Richemont (CFR.S) is seeing strong demand in China but globally expects “headwinds in the months ahead” due to the new coronavirus, the owner of Cartier jewellery said on Friday as it reported annual profit falling by two thirds.

The world’s second-biggest luxury group said net profit for the year to the end of March fell 67% to 931 million euros ($1.01 billion), missing the 1.29 billion euros expected by analysts. Sales rose 2% to 14.238 billion euros, in line with estimates.

The Swiss company which also owns watchmakers Piaget, IWC and Vacheron Constantin said its profit fall also reflected the non-recurrence of a 1.4 billion euro post-tax accounting gain it had last year. Excluding this, profit fell 34%.

The company’s watch brands bore the brunt of the downturn, with operating profit falling 20% and sales down 4% in the year. Jewellery was more resilient, with sales up 2% and operating profit falling 7%.

The company had begun to see some signs of improvement, including in China, where the outbreak started. “Since our 462 boutiques in China have re-opened after the virus, we have seen strong demand,” it said.

Richemont Chairman Johann Rupert said 2020 would continue to see the impact of the new coronavirus.

“The closures of our internal and external points of sales, changing attitudes towards consumption and subdued consumer sentiment will weigh on this year’s results,” he said, adding it was impossible to make meaningful predictions at this stage.

Reporting by John Revill; Editing by Riham Alkousaa and Michael Shields

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