Luxury goods group Richemont said it expected difficult conditions to continue after sales for the first five months of the current financial year ended August 31 decreased by 13 per cent at constant exchange rates over the same period the previous year.

Half-year profits are expected to fall 45 per cent, it added.

The drop was attributed to the repurchase of slow sales of luxury watches and the difficult global environment.

Sales in the UK showed growth since the weakening of sterling against most currencies at the end of June following the EU referendum. Elsewhere in Europe sales were down, particularly in France, due to a significantly lower tourist activity. 

The Americas saw positive momentum in both jewellery and accessories but saw an overall decline in sales due to a weaker performance in watches. 

In the Asia-Pacific region, growth in mainland China and Korea was more than offset by the continuing weakness of the Hong Kong and Macau markets, where it had to buy back unsold inventory from retailers. 

Japan reported significantly lower sales and the strength of the yen also depressed tourist spending in the country. 

The Swiss-headquartered group’s other businesses reported sales growth, thanks to positive performances at Montblanc, Chloé, Azzedine, Alaïa and Peter Millar.

Richemont said it expected the difficult trading conditions to continue and operating profit for the six months ending September 30 is expected to be approximately 45 per cent below the prior year’s level, reflecting the effect of one-off restructuring charges of approximately €65 million, and the additional effect of the buy-backs.

Richemont said the current negative environment is unlikely to reverse in the short term but it “remained convinced of the long-term prospects for luxury goods globally, and in particular for watches and jewellery”.  

Richemont owns a portfolio of leading jewellery and watch brands that include Cartier, Van Cleef & Arpels, Giampiero Bodino, A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Officine Panerai, Piaget, Roger Dubuis, and Vacheron Constantin, as well as the Ralph Lauren Watch and Jewellery joint venture.

Its other luxury brands include Alfred Dunhill, Chloé, Azzedine Alaïa, Lancel, Montblanc and Peter Millar.