By Carol Ryan The Wall Street Journal Fri., Nov. 9, 2018 Watchmaker Richemont’s latest results may set the clock ticking on a Chinese luxury slowdown. The Swiss owner of the Cartier and Jaeger-LeCoultre brands, formally known as Compagnie Financière Richemont, said Friday that sales weakened in September. Trading in Asia was especially poor. The news sent the group’s stock down 6% in early morning trading and hit the shares of other luxury groups, such as LVMH. Coming at the end of an otherwise strong earnings season for Europe’s big luxury names, this is the first concrete sign that the Chinese are spending more cautiously. Richemont’s sales increased 8% in the six months through September, a slowdown from the 1F40% previously reported for the five months through August. In Asia, sales growth was just 5% in September, compared to 20% in previous months, estimates UBS. Jittery investors had already braced for trouble. Fears that the weaker Chinese currency and stock market would dampen spending, together with reports of a Chinese customs crackdown on shoppers bringing home suitcases full of handbags, have wiped a fifth off the valuations of the 10 biggest European luxury stocks since mid-August. Richemont’s portfolio leaves it uniquely vulnerable. Shoppers tend to forgo big-ticket purchases such as $100,000 (U.S.) Vacheron Constantin wristwatches before handbags, meaning the Swiss group will be hit first in a downturn. It is also more exposed than peers to third-party retailers, who order cautiously at the first sign of trouble. And Richemont makes more… [Read full story]
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