May 27, 2010
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Richemont says profits slump, sees pickup

May 27, 2010

GENEVA, May 27, 2010 (AFP) - Richemont, a world leader in luxury goods, said Thursday 27 May its annual net profit slumped almost a fifth, worse than expected by analysts, but that current trading was doing well, with a pickup seen.

Watches from Vacheron Constantin, a Richemont timepiece brand

The company said its year to March 2010 net profit fell 18 percent to 603 million euros (742 million dollars) as sales slipped four percent to 5.2 billion euros.

Analysts polled by economics newswire AWP had expected a net profit of around 705 million euros.

The group, which owns brands such as Cartier, Montblanc and Jaeger-LeCoultre said that its wholesale business in the Americas and Europe "contracted substantially" during the year as watch retailers destocked.

"We have seen a recovery in demand in the second half of the year, albeit measured against easier comparative figures," the group said in a statement.

"Richemont held up well against the global economic crisis and benefits from a very solid financial position," chief executive Johann Rupert said.

"Faced with a slowdown in demand, we immediately took effective measures and gained some market share," Rupert said.

These measures included closing some boutiques, particularly in the United States, while also buying online fashion retailer Net-a-Porter for 350 million pounds (525 million dollars, 390 million euros).

The group said sales in the first quarter this year were in line with levels in the pre-Christmas period and that in April, they jumped 24 percent compared with a year earlier.

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