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. Last Updated: 07/27/2016

Russia's Big Spenders Boost Luxury Retailer

ZURICH -- A liking for expensive watches and jewelry among wealthy Russian and Chinese consumers helped boost sales at luxury goods maker Richemont by 10 percent in the Christmas quarter, the company said Tuesday.

Stripping out exchange rate swings, revenue rose 15 percent in the September-to-December period from a year earlier, broadly in line with analysts' expectations.

"Strong figures but not the positive surprise we were hoping for," said Jon Cox, analyst at Kepler Equities.

The Geneva-based maker of Cartier watches and Van Cleef & Arpels jewelry has benefited from strong demand for its luxurious accessories as the global economy powers ahead.

But a weak dollar and a soft Japanese yen weighed on revenues when translated into euros.

"The jewelry Maisons [units] both reported double-digit growth in underlying sales during the quarter. At actual exchange rates, however, growth was limited to 8 percent for the quarter," Richemont said in a statement.

Unfavorable exchange rates in recent months have caused considerable headaches in much of the luxury goods sector.

The world's largest watchmaker, Swatch Group, which owns the Omega and Blancpain brands, said a negative currency impact would weigh on its margins as it reported a 12.3 percent rise in 2006 sales Monday.

Richemont, which is also listed in South Africa, does not publish its quarterly sales figures and only discloses the percentage changes. Its financial year runs to end-March 2007 and it will report full-year earnings in May.

The maker of Lancel handbags did not comment on the outlook for the remainder of the year. It previously said it expected the group's performance as a whole to be significantly ahead of the previous year.

Nineteen analysts in a poll on average expected sales to rise 10 percent. The estimates ranged from 7 to 15 percent.

Sales in Europe rose 13 percent in the quarter as consumers splurged on expensive Christmas gifts. Luxury-savvy Russians were particularly big spenders this year.

"Sales in newer markets such as Russia continued to grow strongly," Richemont said, though the rate of growth slowed from 18 percent in the first half. For the nine-month period sales rose 16 percent.

The Asia-Pacific region also recorded a 13 percent rise in sales, while Japan reported a 2 percent decline as the weak yen more than offset a 6 percent rise in constant currencies.

"The development of the market in mainland China, the second largest market in the region, contributed significantly to this growth," the group said.

The Americas grew by 11 percent in actual currencies. At constant currencies the rise was 18 percent.

Richemont's Swiss-listed shares have risen 2.3 percent so far this year after gaining 26 percent in 2006.