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Swiss watchmaker empire president Richemont poured cold water on the luxury industry’s hopes of a rapid rebound in the coronavirus, warning of “serious economic consequences” that could last three years.
The reality check of Johann Rupert, who built a reputation for being bearish with pessimistic forecasts ahead of the 2008 financial crisis, contrasts with a more optimistic outlook from industry leader LVMH, who has said he hopes to see signs of recovery. in a few weeks.
Even after consumers come out of the block, changes in spending patterns will persist, he said.
“I am very concerned about the global economy and I am concerned that many politicians promise things that cannot be delivered,” Rupert said in a call. “It is not a pause; it is a restart.”
Watchmaker IWC Schaffhausen, jewelery Cartier and accessories Montblanc said it was impossible to make meaningful forecasts for Richemont’s own business after operating profit fell 22% in the 12 months through March. Shares fell 1.2% early Friday in Zurich.
The Swiss watch industry is preparing for the worst year in decades as exports can drop a record 25% at best in 2020, Vontobel analyst Rene Weber estimated. Watches and jewelry tend to be more affected in economic crises than fashion and leather goods.
Along with other luxury companies, Richemont reported signs of recovery in China in recent weeks. But domestic purchases will not be enough to provide a return to growth, given the importance of foreign spending by continental consumers.
With the majority of ground flights and Chinese tourists boosting sales of high-end products largely stagnant at home for the next few months, the prospects for travel-related retail are bleak. Warnings of possible quarantines for visitors from countries like the UK further worsen prospects.
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