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Richemont first quarter sales up 13%

Swiss-based luxury goods group Richemont says its sales at actual exchange rates have grown 13% to €1.428 billion for the three months ended June. Sales at constant exchange rates grew 20% in the first quarter.
Releasing its interim management statement (IMS), the group said the first quarter of its financial year should not necessarily be taken as indicative of likely trends for the financial year as a whole.

A large part of the group's business is transacted in the quarter to 31 December each year. The quarter to 30 June, while typically representing between 20 and 25% of annual sales, may not be representative of trends for subsequent quarters or the year as a whole, the group said.

The sales growth reflected a continuation of the strong demand seen during the preceding 12 months. The group's Jewellery Maisons - Cartier and Van Cleef & Arpels - reported very strong growth during the period. With the exception of Japan, where sales saw a mid-single digit decrease, all regions reported double-digit growth at constant exchange rates.

Richemont's seven specialist watchmakers continued to benefit from strong demand in all regions other than Japan. At its writing instrument maisons, sales grew by 5% at constant rates.

Strong sales growth through Montblanc's own boutique network was offset by wholesale sales in line with the prior year's level, largely due to logistics issues at Montblanc's new distribution facility. Alfred Dunhill reported sales growth of 6% at constant exchange rates during the period, with strong sales growth in the Asia-Pacific region partly offset by lower sales in Japan. Lancel's sales were 4% above the prior year at constant exchange rates.

Chloé's sales saw a mid-single digit decrease at constant exchange rates, reflecting lower retail sales. The increase in sales of other businesses overall included the impact of acquisitions made during the previous financial year.

Europe saw a 17% increase at actual exchange rates, reflecting continuing sales growth in the region's established markets as well as very strong sales growth in the Middle East and other developing markets.

Asia-Pacific continued to report very strong growth, particularly in China and Hong Kong. Sales in the region represented 25% of group turnover in the quarter.

Underlying sales in the Americas region grew by 20%, reflecting strong retail sales growth of 19%. The growth in dollar-terms was largely offset on translation into euros.

The challenging market conditions in Japan, which have impacted luxury businesses generally, continued during the quarter, with most Maisons reporting lower turnover. Sales in yen terms decreased by 7%. Sales in Japan now represent 11% of total Group sales.

Richemont's net cash position at end June 2008 amounted to €1.29 billion, an increase of €44 million over the net position at 31 March 2008.

During the three month period the group received the final dividend of £186 million from British American Tobacco in respect of its financial year ended December 2007. This inflow was compensated by seasonal net cash outflows in respect of operations together with the exercise of a call option to acquire 1.7 million Richemont 'A' units to hedge the Group's stock option plan, it said.

The group's effective interest in BAT at end June was 19.4%, with a market value of €8.566 billion.

On 22 May, Richemont announced further details of its restructuring proposals which would see the group separated into two entities: a luxury business, headquartered in Switzerland, and a separate investment vehicle.

In addition to retaining their shares in the luxury goods business, it is envisaged that Richemont unitholders would receive shares in the investment vehicle and would be able to receive a substantial part of their interest in the BAT shares directly.

Further announcements in respect of the restructuring proposals will be made when appropriate. No further comment will be made until such time, it said.

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