Luxury group Richemont cautioned on Friday that economic worries and global tensions were weighing on consumer spending as the owner of Cartier jewellery reported first-half profits that missed forecasts, sending its shares down 6 percent.

The Swiss company, which also owns several high-end Swiss watch brands, such as IWC and Vacheron Constantin, is the latest luxury specialist to flag a slowdown in recent months as the post-pandemic spree wears off.

French rival LVMH last month reported a slowdown in demand for high-end goods in the United States and Europe where rising prices have prompted shoppers, especially younger generations, to cut back on spending.

Richemont on Friday joined what Bernstein analyst Luca Solca called the “moderation club,” reporting constant currency sales growth easing to a 5 percent rate in July to September.

Sales had increased by 19 percennt in the April to June period.

Richemont Chairman Johann Rupert said inflation, slowing economic growth and geopolitical insecurities were dampening sentiment, while the full effects of rising interest rates were still to be seen.

“It’s no surprise to us that the market will slow down and across all asset classes, because that’s the purpose,” Rupert told reporters, referring to higher interest rates.

The post-COVID feel-good factor in China had also dissipated, as a property crisis and record youth unemployment have weighed on sentiment.

“They’re not going out to bust their credit cards,” Rupert said referring to Chinese customers, who make up 30 percent of Richemont’s sales. “There is a bit of caution on their side.”

Still, Rupert said Richemont was well equipped to withstand the slowdown, with cash on hand to continue investing in boutiques, products and marketing.

“I’m very positive about the medium term outlook. I’ve been involved with Cartier since 1976, trust me, I’ve seen a bunch of ups and downs and ups and downs,” he said.

“So, I’m not concerned about the next three to five years. Certainly, we will use the opportunity to gain market share because we’re in a position to support ourselves.”

In the six months to the end of September, Richemont’s sales rose by 6 percent to €10.22 billion ($10.9 billion), short of the €10.34 billion expected by analysts, while profit of €1.51 billion was below the €2.17 billion euros forecast by analysts in a consensus cited by Zuercher Kantonalbank.

Still, despite missing sales and profit expectations, the company’s performances in the United States and in jewellery sales were better than expected, said Kepler Cheuvreux analyst Jon Cox, noting the outlook for a soft landing and expectations for improvement in China were “remarkably decent.”

This article was written by John Revill and Mimosa Spencer from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

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