The chairman of Swiss watch empire Richemont poured cold water on the luxury industry\u2019s hopes of a quick rebound from the coronavirus, warning of \u201cgrave economic consequences\u201d that could last three years.<\/p>\n
The reality check from Johann Rupert, who earned a reputation for bearishness with downbeat forecasts before the 2008 financial crisis, contrasts with a more optimistic outlook from industry leader LVMH, which has said it expects to see signs of a recovery within weeks.<\/p>\n
Even after consumers emerge from lockdown, changes in spending patterns will persist, he said.<\/p>\n
\u201cI\u2019m very concerned about the global economy, and concerned that many politicians are promising things that are not deliverable,\u201d Rupert said on a call. \u201cIt\u2019s not a pause; it\u2019s a reset.\u201d<\/p>\n
The maker of IWC Schaffhausen watches, Cartier jewelry and Montblanc accessories said it\u2019s impossible to make any meaningful forecasts for Richemont\u2019s own business after operating profit fell 22% in the 12 months through March. The shares fell 1.2% early Friday in Zurich.<\/p>\n
The Swiss watch industry is bracing for the worst year in decades, as exports may drop a record 25% in the best-case scenario in 2020, Vontobel analyst Rene Weber has estimated. Watches and jewelry tend to be harder hit in economic crises than fashion and leather goods.<\/p>\n
Along with other luxury companies, Richemont reported signs of recovery in China in recent weeks. But domestic shopping won\u2019t be enough to provide a return to growth, given the importance of mainland consumers\u2019 overseas spending.<\/p>\n
With most flights grounded and Chinese tourists who have fueled sales of high-end goods largely stuck at home for the coming months, the outlook for travel-related retail is bleak. Warnings of possible quarantines for visitors to countries such as the U.K. worsen the outlook further.<\/p>\n