Richemont’s sales soar in early sign of luxury recovery

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Richemont’s sales soar in early sign of luxury recovery

stock :: 2025-01-16 :: source - bloomberg

By Angelina Rascouet

(Bloomberg) — Richemont (CFR.SW, CFRHF) sales unexpectedly jumped by double digits during the holiday shopping season as consumers splurged on Cartier jewelry, a tentative sign that demand for luxury goods may be recovering.

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Sales soared 10% during the three months through December at constant exchange rates, Richemont said Thursday. Analysts had expected a gain of less than 1%. The Americas and Europe drove the performance, with purchases of expensive jewelry offsetting weak watch sales, which have weighed on the group’s performance.

“We view these results as exceptionally strong,” Piral Dadhania, an analyst at RBC Capital Markets, wrote in a note.

The performance lifted shares of Richemont by as much as 18% in early trading and boosted other luxury groups on optimism the worst may be over for the industry, which has faced cooler demand for high-end goods after years of aggressive price increases.

The final three months of the year is typically the most important period for luxury labels because of holiday shopping.

Richemont owns Cartier and Van Cleef & Arpels, two sought-after jewelry brands. This part of the market, known as hard luxury, often does better in times of uncertainty as jewelry tends to be more timeless than handbags and other fashion items. Richemont’s watch segment also did better than estimates, with revenue falling less than expected.

Some companies catering to the very wealthy have weathered the luxury downturn better than those appealing to the less well-off.

“Although still fragile, the market is showing signs of stabilization,” in China, Vontobel analyst Jean-Philippe Bertschy wrote in a note. But overall, “despite the challenging situation in China and in watches, Richemont has never been stronger,” he added.

Even Richemont’s performance in the Asia Pacific region, where sales slid by 7% in the past three months, was much better than estimates. Only China, where shoppers have shown less appetite for luxury amid worries about the health of the real estate market, remained a weak spot, with sales dropping 18% in the quarter.

Though Richemont’s greater exposure to jewelry gives it some insulation from the volatility of other fashion categories, rivals also rose on the news. LVMH (MC.PA, LVMUY) gained as much as 8.6% in Paris, while Hermes International (HESAY, HMIA.F) climbed 6%.

Earlier this week, Brunello Cucinelli SpA posted strong quarterly revenue and forecast sales growth of 10% this year and next. The Italian brand sells cashmere and vicuña bomber jackets for €17,500 ($17,992.)

LVMH Moët Hennessy Louis Vuitton SE, the world’s biggest luxury group, will report earnings on Jan. 28. The French company, led by billionaire Bernard Arnault, is more exposed to the so-called “soft luxury” segment, which offers handbags and ready to wear fashions.