On Friday, Richemont posted a quarterly update that showed a 12% sales growth despite a brutal 37% drop in sales for Mainland China. That region is very significant for the company, achieving double-digit overall growth despite the drop in China is good going. There was 82% growth for Japan and 42% for Europe. The return of tourism has been a strong tailwind for luxury sales.
Online distribution is still the problem child for the group, only showing sales growth of 2%. Given the amount of capital invested into the division, they expect to see faster growth. Selling jewellery online is just tough.
Unfortunately, the Richemont share price dropped 3% on Friday in reaction to the numbers. The share price move seems to be based on the bad Chinese numbers. Hopefully, we see China shift more in line with the rest of the world in terms of freedom of movement.
Fortunately, the group is conservatively managed, they were able to increase cash on hand from EUR 3.6 billion to EUR 5.4 billion for the period. Richemont is still one of the best long-term stocks listed locally. The picture below is of their beautiful headquarters in Switzerland.