Compagnie Financière Richemont ($CFR, CFR.JO) shares fell more than 5% late Friday morning in Switzerland following the announcement of lower revenue and profit for the first half of fiscal 2025, attributed to weaker demand in China for luxury watches. The renowned Swiss luxury goods company reported a revenue decline to 10.08 billion euros for the six months ending September 30, down from 10.22 billion euros due to diminished sales in the Asia Pacific region.
This decline was notably impacted by a substantial double-digit sales drop in key markets such as China, Hong Kong, and Macau. The company primarily linked this drop to reduced consumer spending coupled with an increase in higher sales to Chinese tourists elsewhere beyond the Asia Pacific. Notably, the group's Jewellery Maisons segment, known for iconic brands like Cartier, reported an increase in sales, reaching 7.09 billion euros, up from 6.95 billion euros in the prior year.
In contrast, the Specialist Watchmakers category experienced a decline, with sales falling to 1.66 billion euros from 1.99 billion euros, largely due to its reliance on the Asia Pacific market. Analysts from RBC Capital Markets noted, "Richemont has demonstrated market-leading revenue growth since the COVID-19 pandemic for its key Jewellery Maisons division.
We expect this trend to largely continue into calendar 2024; however, it is important to recognize that the broader luxury demand and macroeconomic environment presents less favorable conditions, leading us to anticipate more moderate growth from this point forward. Categories such as jewellery, and Richemont's prominent brands, including Cartier and Van Cleef & Arpels, seem to be defying this prevailing trend." The group's attributable profit for the first half of the fiscal year also faced a significant decline, dropping to 458 million euros compared to 1.51 billion euros last year.
This downturn was significantly influenced by a 1.27 billion-euro loss resulting from discontinued operations, primarily due to a non-cash writedown associated with the sale of Yoox Net-a-Porter to Mytheresa..