Richemont Saw Sharp Slowdown in Luxury Sales

That is the title of today's article in the Wall Street Journal, section B, page 5, 11/15/09 - regarding Vacheron's parent company. It further stated, "October showed a significant change of mindset" from earlier in the year, said Richard Lepeu, the Swiss group's finance director. Having just returned from a 3 week European trip in Spain, Portugal and the Canary Islands I had a first hand opportunity to visit watch stores overseas and hear personally of their downturn in business with our world wide economic recession. The stores were full of merchandise, but virtually no customers present with sales people standing around their shops. They were quite welcoming to me and willing to discuss what they have experienced since this summer. Very difficult for their store owners and employees with the holidays ahead. The euro which had seen highs in the 1.60s to the US dollar was exchanging at 1.25 to the US dollar during my vacation trip. I must say that I was treated quite kindly in each high end watch store once the staff realized that I was well read on their brand and its history. Its good to be back home now with just a little jet lag. Hope I haven't missed anything signifcant while I was away from my fellow loungers. Kind regards, Matt
I've been reading here and there about the crisis hitting the
11/15/2008 - 23:23

luxury watch market but I read somewhere that the Swiss Watch Federation was expecting a global 6-7% increase in profits for 2009 and I don't know many industries which can post such increase even in economically strong years!

No doubt that Spain has been probably the European country which has been hit hardest but maybe with the lower Euro the American tourists will be back...

Anyway welcome back.  

Re: I've been reading here and there about the crisis hitting the
11/16/2008 - 00:16
Thanks Alex for your note. Glad to be back home. I shared this article as I personally learned of changes in the overall industry. Richemont is the very first to report October sales, but LVMH is also expected to report weakening sales. Richemont's finance director also stated in the Wall Street article that " watch and jewelry makers sell a large proportion of their products through wholesale clients. Those clients have drastically reduced their orders because of the reduction in sales." I just got off the phone with my AD here in the US that confirmed his sales were seriously down off his expected sales targets. The economic recession being felt here in the US will clearly affect those 2009 sales predicted by the Swiss Watch Federation. Luca Solca, the Sanford Bernstein analyst also reported to the WSJ "that the unfolding economic slowdown has begun to impact demand for high end luxury". Anyway that's what I wanted to share with my lounger friends. Matt
Re: Re: I've been reading here and there about the crisis hitting the
11/16/2008 - 00:42
With respect to your comments... the auctions this week (Antequorum, Sotheby's and Christies, Patrizzi)) may turn out to be a bellweather for the industry. I wonder how Sotheby's and Christies are doing in their other departments. Regards, Joseph
not surprised...
11/16/2008 - 21:36
In a downturn, the luxury industry should be hit harder than the rest of the economy - it's just common sense. People are becoming a lot more prudent with their income, they cut back on their spending, and the first thing o go will be the non-critical, frivolous luxury purchases. And I don't believe the argument that the customers buying luxury products are less likely to feel the pain of the economic recession and keep on spending the way they used to. If anything, they probably have more money invested in the markets than the average Joe, and will on average have a higher decrease in wealth. Alex, I am ready to make a friendly wager with you (say, $10?) that the Luxury Watch industry will not reach an increase of 6-7% for 2009. In fact, I'll eat my hat if there is an increase at all in total revenues. The one thing that I am wondering if how much of an impact will the watch price increases over the last few years have on the watch sales? Will the watch manufacturers pay for they short-term pursuit of a quick profit? Hopefully there will need to be a readjustment of prices and they will come back to a more "normal" level Cheers, Francois