Richemont calls time on China’s luxury crackdown

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Richemont has suggested that Chinese consumption of its Swiss watches and other luxury goods is rising again.

A crackdown on conspicuous consumption by the authorities in Beijing had dampened demand for its brands such as Cartier, IWC and Piaget, but the group’s chief says that sales have started rising again.

"We have reached the bottom in China," said co-chief executive Bernard Fornas. "The worst was two years ago," he added at the announcement of Richemont’s results for the full financial year that ended March 31.

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The improving picture in China contributed to Richemont’s annual profit rising 2.9% to €2.06 billion.

Richemont bore the brunt of a Chinese government directive to stamp out business deals being smoothed along with the exchanging of expensive gifts. The maison’s watches were particularly favoured as a currency in what authorities felt was fuelling corruption.

April, the first month after Richemont’s full financial year, saw the first increase in demand in China after sales had fallen by 7.5% in the 12 months to March 31.

"We have experienced over the last six months a significant improvement in China," said Richemont’s other co-CEO, Richard Lepeu. "Because we are starting to see better figures and growth in China over the last few months, we are rather optimistic."

Globally, sales rose by 5% year-on-year for Richemont, with profit for the year increasing by 3% to €2.06 billion.

Europe, including the Middle East and Africa accounted for 37% of global sales, rising by 9% to €3.9 billion.

Specialist Watchmakers’ sales increased by 9% overall and all reported improved results, including Baume & Mercier.

 

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