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Richemont shares pummelled as franc rises

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Richemont shares pummelled as franc rises
Photo: Richemont
14:02 CET+01:00
Geneva-based Richemont, the world's second largest luxury group, says its global sales inched higher in the third quarter despite plunging demand in its key Asian market but investors punished the company's share price on Thursday over worries about the surge in the Swiss franc.

During the third quarter of its 2014/15 fiscal year, which ended on December 31st, the Swiss company raked in €3 billion ($3.5 billion) in sales, up four percent from the same period a year ago, the company said in a statement.

However, Richemont, which counts Cartier and Piaget among its luxury brands, acknowledged that at constant exchange rates its year-on-year sales remained flat.

The company announced its sales figures on the same day as the Swiss National Bank announced that its was abandoning its policy of tying the franc to the euro, sparking a sharp rise in the value of the franc.

Richemont shares subsequently fell 17 percent as investors worried about the impact of the high franc on Swiss companies that depend on exports.

Analysts polled by the AWP financial news agency had expected to see sales of €3.1 billion for the period.
Sales in the Americas climbed by seven percent in constant exchange rates, spurred by higher sales of jewellery and sales on Net-à-Porter, Richemont's high-fashion online retailer designed in the style of a magazine.

European sales shot up nine percent on the back of strong local demand "and a return of visitors in the main tourist destinations, helped by favourable exchange rates," the company said.

But sales in the lucrative Asia-Pacific market plunged 12 percent due to a difficult trading market, especially in Hong Kong and Macau, Richemont said.

In Japan, a market which is calculated separately, sales meanwhile rose just two percent, but the sluggish rise was mainly due to a 47-percent surge in sales during the year-ago period ahead of an anticipated sales tax increase last April.

Richemont is not the only luxury group hit by dwindling demand in Asia.

On Wednesday, British luxury fashion group Burberry also announced a drop in its Hong Kong sales, and US jeweller Tiffany reported worse-than-expected quarterly profits amid a fall in business on the continent.
 

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