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Bloomberg
Richemont slumped after the Swiss luxury-goods maker signaled that the recent boom in China is over and warned that a trade war could dent demand for Cartier necklaces and Piaget watches.
The stock fell as much as 5.4 percent in early trading. Richemont reported an unexpected decline in first-half operating profit amid M&A-related costs and as the company sold fewer Swiss watches to third-party retailers to try to ease a glut in the market.
An 18-month period of double-digit growth in the domestic Chinese market is over, Chief Financial Officer Burkhart Grund told reporters on a call. Sales there are now rising by a high-single-digit percentage rate, which he described as more normal, while warning that a weakening yuan or a trade war could slow it down further.
Wholesale watch sales declined, offset by double-digit growth in Richemont’s own boutiques.
The lingering weakness in sales of watches to third-party retailers shows that it’s taking time to turn that business line around.