Cartier owner Richemont says "yellow vest" protests in France weighed on its sales at the end of 2018, but it signalled healthy momentum in China that could bode well for some luxury-goods rivals.
Investors are on edge over worries that the Chinese appetite for big-ticket items could wane as its economy slows, particularly after an Apple warning last week over weaker iPhone sales in the country.
Further clouding the picture is a shift in spending patterns as Chinese consumers, squeezed by a falling yuan, start spending more at home, creating uncertainty for overseas shopping destinations.
Richemont, the world's second-biggest luxury-goods group, said sales growth had slowed in the three months to December 31 in Hong Kong, for instance, the biggest market in the world for watches. That came on top of problems in France, where a backlash over high living costs led to riots in Paris, which, according to Richemont, "negatively impacted tourism and led to store closures for six consecutive Saturdays".
French companies this week revealed some 60m (R955m) of lost business from the anti-government demonstrations.
But Richemont - which also makes Van Cleef & Arpels jewellery and owns IWC watches and fashion brand Chloe - signalled sales were still progressing at a healthy pace in mainland China, citing "double digit" growth there.
Chinese shoppers at home and abroad account for over a third of sales in the luxury industry as a whole, and companies are shaking up their approach to corner that clientele, arguing that in the long-term demand will stay strong.
Richemont said in October it was partnering with China's e-commerce giant Alibaba to shore up sales there.
Overall, Richemont posted a 5% rise in sales at constant currencies in the October-December period, its third quarter, excluding recently acquired online distributors Yoox Net-A-Porter and Watchfinder, a second-hand platform. That marked a slight slowdown from the 8% growth in the six months to end-September, though it was in line with consensus estimates cited by analysts.
"Sales grew in all regions, with the exception of the Middle East and Europe," Richemont said.
Analysts at RBC cited Asia as a bright spot - underlying sales there increased 10%, down from 14% in the prior six-month period - and said prospects for jewellery were encouraging.
But others like Berenberg pointed to a flat performance by its specialist watch brands as a potential headwind for rivals such as Swatch. - Reuters..