Richemont trading update

On Wednesday, Richemont released a decent trading update. Sales were up 6% in constant currencies, and their net cash position has grown slightly. The biggest blemish on the results was 4% drop in sales from the Asia Pacific region.

A few years ago, any drop in sales from China, Hong Kong and Macau would have seen a swift fall in the Richemont share price. Today, that is not the case, and the share price actually closed 0.9% higher. It is a testament to the hard work management has put into diversifying the group. European and American sales were up 11% and 10%, respectively, a solid showing.

Japanese sales were down 10%, but that is on the back of comparable numbers that were up 59%, so this slight drop is understandable. Japanese sales last year were driven by a weak Yen, resulting in Chinese tourists traveling to the country to take advantage of favourable pricing. The company does note that tourist sales have slowed this year, but demand from Japanese residents has remained strong, which is what you want to see.

The Specialty Watchmakers division continues to struggle, even though there was double-digit growth from the Americas. The weakness is attributed to poor sales in Asia again. This, in time, will also balance out as the group continues to diversify its product offering and regional focus. We are happy holders of this quality company.