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Richemont cautious as sales drop 16 percent

September 09, 2009

Geneva--Swiss luxury goods group Richemont saw overall sales decrease 16 percent at actual exchange rates for the five months ended August, compared with the same period last year, according to a statement from Executive Chairman Johann Rupert issued on Wednesday.

Richemont's Jewellery Maisons sector, which includes Cartier and Van Cleef and Arpels, experienced a 14 percent decrease in sales for the period, and the Specialist Watchmakers sector, which includes A. Lange and Sohne, Baume and Mercier, IWC, Jaeger-LeCoultre, Officine Panerai, Piaget, Ralph Lauren Watches, Roger Dubuis and Vacheron Constantin, saw sales drop 18 percent.

Richemont's retail business fared reasonably well, according to the statement, with sales decreasing 7 percent compared with the same period last year. The company's wholesale business, however, is down by 21 percent, which largely reflects de-stocking by retailers, most notably in the Americas.

From a regional standpoint, sales in the Asia-Pacific region, including China, increased by 5 percent for the period; however, sales in Japan were down 7 percent.

European sales were 22 percent lower than last year, including the Middle East.

The Americas region was the worst performer for the period, with sales decreasing 36 percent.

Rupert said that despite the company's continuing cost-control measures, its profitability for the six months of the year ending September will be significantly lower year-over-year.

"Although the rate of decline in sales is slowing, we still urge caution," Rupert said in the statement. "We would prefer to wait until we have more evidence of a broader economic recovery before speculating on the likelihood of a better second half, particularly when it comes to the wholesale business."
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