Luxury titan Richemont, the parent company of Cartier, reported a 20% dip in net profit for the first half of the year, with slowing consumer demand in China driving the decline. For the six months ending in September, Richemont’s profit after tax landed at 1.7 billion euros ($1.8 billion), falling short of analyst expectations. Global sales also slipped by 1% to 10.1 billion euros, with the Asia-Pacific region, particularly China, showing the sharpest declines.
While other markets posted solid growth, Richemont highlighted that reduced spending in China offset gains in other Asian countries, underscoring the impact of the economic slowdown in the world’s second-largest economy. China’s downturn has sent ripples through the luxury sector, with brands like Louis Vuitton, Dior, and Bulgari parent LVMH also recently noting a 4.4% sales drop for the third quarter. Similarly, Kering, the parent company of Gucci, reported a 15% sales decline in the same period, attributing it to China’s shifting spending patterns.
Richemont’s experience underscores the challenges facing luxury brands heavily reliant on Chinese consumers. As the market recalibrates, companies may look to strengthen growth in other regions while keeping a close eye on China’s recovery trajectory.
