Sales for the Specialist Watchmakers division of Richemont slumped by 38% over the six months to September 30 compared to the same period in 2019, although the sales decline improved from 56% in the first quarter to 18% in the second quarter, notably supported by a strong performance in China, the company said in a financial report today.

Shares rose by almost 8% in this morning’s trading as analysts welcomed the improving picture.

Specialist Watchmakers includes both wholesale of timepieces to multibrand partners and direct retail sales through ecommerce and directly operated stores.

Wholesale contracted more than retail sales.

From what Richemont describes as a low base, online retail sales grew by triple digits driven by participation in online initiatives such as the Watch Show on the Cloud and Watches & Wonders Shanghai, which introduced 2020 collections to the Chinese market, as well as by the opening of flagship stores for IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget and Vacheron Constantin on Tmall’s Luxury Pavilion.

Fears that the there could be a glut of supply leading to a rise in grey market watches sales appear to be unfounded, with Richemont reporting that “inventories in the channels are sound, with sell out remaining above sell in”.

Online retail for all jewellery and watches across Richemont was the most resilient channel for the period, with a decline of just 3%, although the group’s Online Distributors, which includes YOOX NET-A-PORTER  and Watchfinder, saw sales drop by 21%.

The performance was significantly impacted by a temporary fulfillment centre closure in the early part of the reported period as well as a highly competitive environment in online fashion,” Richemont reports.

Direct to consumer online retail sales through ecommerce sites of Richemont brands more than doubled compared to the prior year period. Overall, online retail including Online Distributors increased its contribution to 22% of group sales from 17% in the prior year period

Total Richemont sales dropped by 26% for the six month period to €5.5 billion. Operating profit dropped by 61% to €452 million.

Europe and Japan were the worst-performing territories, both registering 44% drops in sales. Americas were down 33% while Asia Pacific was off by 6% and Middle East and Africa dropped by 7%.

Richemont chairman Johann Rupert signalled his preference for more direct sales by the group’s watch brands through owned and operated physical stores and ecommerce.

“The Specialist Watchmakers’ more pronounced decline in sales reflected their greater reliance on multibrand retail partners,” he notes in this morning’s financial report.