Richemont (CFR), one of the largest luxury goods groups in the world, has reported strong sales growth in spite of the ongoing unrest in Hong Kong.
Concerns had grown towards the end of 2019 as to the effect the disruption would have on the Swiss firm, which is second only to Louis Vuitton Moet Chandon (LVMH) in the luxury goods market.
With one of the highest concentration of billionaires in the world, Hong Kong is an essential market for Richemont. Fears over how it would be affected by events in the territory were vindicated, with sales growth declining markedly.
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Throughout 2019 Hong Kong’s reputation as a hub of international markets was threatened by ongoing geopolitical unrest. It lost its top spot as the most favoured location for initial public offerings to New York and major funds faced a degree of capital flight.
However, Richemont was able to offset any decline in sales growth by expanding on the Chinese mainland and in South Korea. Double-digit growth in these regions helped the group’s third-quarter sales rise by four per cent at constant currency rates, or per cent per cent in actual exchange rate.
The owner of luxury watch brands such as Jaeger-LeCoultre and IWC also saw nine per cent sales growth in Europe and five per cent growth in the United States. The smart-watch boom of recent years has not affected premium brands in the same way as mid-market businesses such as Swatch.
While Hong Kong sales may have stagnated, Japan proved to be the most challenging area for Richemont. A strong yen, an increase to value-added tax and a lower level of tourism all contributed to a seven per cent fall.
Nonetheless, news of €4.16bn (£3.54bn, $4.62bn) Q3 revenue has buoyed investor sentiment, and shares in the group rose 4.25 per cent to stand at 80.42 CHF by late morning.