Luxury products industry lives days of pessimism

(Bloomberg)--the crisis in the global luxury goods industry deepened after the Hermès International abandoned a projection maintained for a long time and that Richemont profit fall designed a the Chairman of the Board of the company, Johann Rupert, considered unacceptable.
The Richemont, maker of Cartier jewelry, said the operating profit of the first half probably will fall about 45% of and warned that it may have to deepen the cuts in costs.
The Hermes Kelly bags manufacturer, which typically is among the most resilient sector, abandoned the goal of annual growth of 8% of sales, replacing it with what he described as "an ambiguous goal".
The industry deals with another year of falling demand because of China''s campaign against excessive spending added the collapse of tourism after the terrorist attacks in France and Belgium, a situation that Rupert was characterized as a "fiasco". Richemont''s revenue fell 13%, excluding currency swings, the period of five months until August, and therefore below the estimates of analysts.
"The alerts shows that the macro and geopolitical uncertainties put in doubt the short-term volume growth," said Zuzanna Pusz, an analyst at You. "The challenges faced by the industry of luxury are not over."
The shares of Hermès fell 7.7% in Paris, higher decline in almost three months, even if the profit of the first half have exceeded estimates. By Wednesday, the stock had climbed 24 percent this year, while other luxury stocks stagnated or fell. The Richemont fell 4.6 percent in Zurich, and the Swatch Group fell 3.5%.
'' Less flexible ''
The Hermes predicts that profits will be lower in the second half than in the first, said the CEO Axel Dumas in a teleconference.
"We have to be open and transparent, we had better results than we expected in the first half, but there is a lot of uncertainty around the world and the rigidity of the guidance makes us less flexible," he said.
Earnings before interest and taxes in the first half rose to 826,800,000 euros (US $ 928 million), according to Hermes. Analysts predicted 818,500,000 euros, according to the average of 12 estimates.
Restructuring expenses
The Richemont reported that the decline in operating profit in the six months through September includes some 65,000,000 euros in one-off restructuring costs, but not explained. Analysts had projected a fall of 41%, according to estimates compiled by Bloomberg.
The Geneva-based company, which has been cutting jobs in the production of watch brands such as Vacheron Constantin, needs to slow down to fit reduced demand, said Rupert at the meeting. Close shops and buy back the stocks of unsold clocks "are not enough," he said.
"We have to wipe until you reach the actual demand in the market," said Rupert. "The world today has an excess of every kind of artifact."
The difficult trading conditions will continue in the rest of the month, Richemont said. "We have the view that the current negative environment as a whole probably not reverse in the short term," said the company.