Luxury giant Richemont talked of “sustained resilience” in the six months to the end of September on Friday, but that couldn’t disguise the fact that the company reported slumping profits for the first half of its financial year as its high-end watches saw lower demand in the key Chinese market.

Sales at constant currencies were just about stable for the period but operating profit undershot analyst expectations at €2.2 billion.

Looking at the full set of figures that the company shared on Friday, sales fell 1% to €10.077 billion with gross profit down 3% at €6.771 billion. The gross margin fell to 67.2% from 68.2%.

Operating profit was down 17% at €2.206 billion with the operating margin falling to 21.9% from 26%. Profit for the period from continuing operations was down 20% at €1.729 billion and the loss for the period from discontinued operations widened to €1.272 billion from €655 million a year earlier (mainly due to the non-cash write-down of YNAP). Final profit for the period was down to €457 million from €1.5 billion a year ago, although the company’s net cash position improved to €6.1 billion.

So on the surface it doesn’t look great, although there’s no denying that the company’s brands are still heavily in demand and generating massive sales.

It also highlighted various achievements during the period including the completion of its acquisition of Italian jewellery Maison Vhernier; signing an agreement by which Mytheresa will acquire YNAP in exchange for a 33% equity stake in Mytheresa; strengthened governance with the appointment of a new group CEO; plus new leadership in place at Cartier and Van Cleef & Arpels.

And there was also continued growth in direct-to-client sales, now accounting for 76% of the group total.

This mix of good and bad extended to the individual units it operates, which saw contrasting performances. Richemont enjoyed continued growth at its Jewellery Maisons, with sales up 2% at actual exchange rates (+4% at constant exchange rates), delivering a 32.9% operating margin.

Buccellati, Cartier and Van Cleef & Arpels, “continued to show strength and gain share” but limited price increases over recent months “were not sufficient to fully offset raw material cost increases, notably that of gold”. The Jewellery Maisons nonetheless delivered a €2.3 billion operating result and a corresponding 32.9% operating margin.

There was a decline in sales at Specialist Watchmakers, by 17% at actual exchange rates (-16% at constant exchange rates) to €1.7 billion with a 9.7% operating margin on the aforementioned Chinese weakness. 

Sales were up 4% in the ‘Other’ business area, at both actual and constant exchange rates. But it saw a €52 million operating loss, with Fashion & Accessories Maisons posting a -2% operating margin and a €23 million operating loss as part of the €52 million total. The group’s fashion brands include Chloé, Alaïa, Dalvaux, Dunhill, Gianvito Rossi, Peter Millar and more and the strongest labels here were Alaïa and Peter Millar, which continued to “outperform”.

Geographically, the first half saw “solid” growth in sales across all regions, except for Asia Pacific, with double-digit (10%) growth in the Americas reinforcing the US’s position as the largest individual market for the group. Japan was also very strong with sales up 32% at actual exchange rates. EMEA also posted “robust” growth. This balanced regional mix “contributed to offsetting the 19% decrease in Asia Pacific sales, led by China”.

Meanwhile, the company’s CFO Burkhart Grund said separately that the group could get a boost now that US pre-election uncertainty following this week’s presidential poll is out of the way. But it’s also too early to judge how potential tariff hikes under Donald Trump would affect the luxury company.

The CFO said the firm traditionally does well after elections, regardless of the winner.

Grund told Reuters: “We’ve been quite resilient in that volatile environment pre-election, which gives us a good basis for continued growth after the elections.”