Richemont Five-Month Sales Growth Slows

Richemont, the world's second-largest luxury goods group, reported a slower pace of sales growth in the first five months of its financial year and said it was cutting its exposure to any major downturn.

Richemont posted an 11% rise in sales from April to end-August, edging past forecasts for a 10% gain but had slowed compared to a year ago owing to swings in exchange rates.

Sales had risen 16% in the same period last year on huge demand from emerging countries such as China and Russia for branded luxury accessories.

Chairman Johann Rupert said on Thursday the appetite for the Swiss company's high-end brands such as Cartier and Piaget had so far withstood market turbulence that has meant "access to easy money has dried up for some market participants."

"Richemont has not suffered any financial losses as a consequence of the unsettled market conditions. Equally, we are seeking to minimise our exposure to any major downturns in terms of markets and consumer confidence," Rupert said.

Shares in the company were indicated up around 1% in a generally weaker market.

Currency Swings

"There are many opportunities for our businesses to grow, both in terms of the expanding number of potential clients in established markets as well as new markets which are opening up to luxury products," he said.

Richemont generates most of its sales outside Europe but reports in euros, making it sensitive to currency swings. At constant exchange rates, which smooth out fluctuations such as the recent fall the yen against the euro, Richemont's five-month sales rose 17%.

Asia represented Richemont's fastest regional sales growth over the period, with a 22% increase. European sales rose 14% and sales in the Americas gained 6%.

Richemont is viewed as a possible predator in the luxury goods sector. Some analysts believe that the Geneva-based firm may be eyeing a number of unlisted, well-known brand names expected to come on the market.

Richemont shares have risen 2.25% this year so far compared with 5% for the luxury and consumer goods sector on the whole and a flat performance for rival LVMH, the world's largest luxury goods group.

Richemont shares are priced on an expected price/earnings for 2008 of around 15, almost on par with 16 at LVMH and 15 for the sector, according to Reuters data.