Cartier owner Richemont beats expectations as jewellery shines
PARIS: Cartier owner Richemont beat expectations on Friday with a 7% rise in quarterly sales as wealthy shoppers continued to splash out on jewellery, helping the group outperform rivals in the luxury downturn.
Richemont, which also owns jewellery brand Van Cleef & Arpels and watchmaker Piaget, said its jewellery sales jumped 11% in its fourth quarter to the end of March, from a year earlier.
That offset an 11% decline in its watches division, where Chinese sales have been hit as the country's property crisis shrank the appetite for luxury purchases.
Swiss-based Richemont's total sales for the quarter amounted to 5.17 billion euros ($5.80 billion), a 7% rise in constant currencies, beating a 6% rise forecast in a Visible Alpha consensus cited by HSBC.
Strong jewellery sales were 'more than enough' to offset weakness in watches, said JPMorgan, adding it showed Richemont has 'truly shifted towards the higher quality, more profitable and less cyclical part of the business.'
Richemont shares rose 5% on Friday morning.
The group, which caters to an extremely wealthy clientele, is viewed by analysts as more resilient to a downturn than other luxury groups that rely more on fashion sales.
'Richemont continued to gain significant market share in jewellery,' Vontobel analyst Jean-Philippe Bertschy said, noting the division accounted for 54% of sales, compared to 36% in 2019.
Bertschy also flagged what he said was spectacular growth and profit, especially when compared with competitor LVMH which owns jewellery labels Bulgari and Tiffany, although he said Richemont was 'not impervious' to the current volatile environment.
The logo of luxury goods company Richemont seen at its headquarters in Bellevue near Geneva
Luxury groups started the year with hopes that robust demand in the United States would lift the sector out of its biggest slump in years, but from mid-February, signs emerged of a weakening U.S. economy and tariff announcements in April brought more uncertainty.
Richemont shares have now gained 18% since the start of the year, while shares of Hermes which also caters to ultra wealthy shoppers, are up 14%. LVMH and Gucci-owner Kering are down 20% and 25% respectively.
Price hikes
Richemont executives, who were more cautious than peers in raising prices during the post-pandemic surge in demand, said they were closely watching tariffs in the United States, and will consider 'all different options' to mitigate the impact while sticking to a strategy of keeping prices globally at the same level.
'We will adjust,' Richemont Chairman Johann Rupert said in a call with journalists.
Cartier, which cites exchange rate movements as a key reason for price hikes, already raised prices in March.
U.S. tariffs could include a 20% charge on European fashion and 31% for Swiss-produced watches if fully applied, but in April U.S. President Donald Trump paused most of his tariffs for 90 days, setting a general 10% duty rate instead.
Richemont's peer Hermes has said it is passing the full amount of tariffs to customers in the United States.
Fears of a global recession have prompted downward revisions in estimates with consultancy Bain lowering its annual sales forecast for luxury goods to a likely 2% to 5% drop, following the sector's 1% decline in 2024.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
17 minutes ago
- Business Recorder
Japan's Nikkei jumps as chip stocks rally ahead of Sino-US talks
TOKYO: Japan's Nikkei share average advanced 1% on Monday ahead of trade talks between the US and China in London later in the day, with investors watching for any easing of restrictions over semiconductor shipments. Both countries are under pressure to relieve tensions, with China dominating global exports of rare earth minerals needed for chips and other advanced technologies, while the US has curtailed exports of chip-design software to China. A phone call between US President Donald Trump and Chinese counterpart Xi Jinping on Thursday led to the Monday talks, with Trump later saying rare earth supply would no longer be a problem for the United States. Japan's Nikkei bounces as US tariff fears ease, yen softens The Nikkei rose 1.05% to 38,137.09 as of the midday trading recess. The broader Topix rose 0.63%. A sub-index of growth shares rallied 0.8%, outpacing a 0.47% rise in value shares. Chip-testing equipment maker and Nvidia supplier Advantest was Nikkei's biggest gainer in index-point terms with a 5.17% climb. 'The trade talks in London are at the very least a step in the direction of easing restrictions on chip shipments between the US and China,' buoying the sector on Monday, said Yunosuke Ikeda, chief macro strategist at Nomura. Artificial intelligence-focused startup investor SoftBank Group jumped 4.03%. Chip-sector stocks Disco and Lasertec rose about 3% each. Otsuka Holdings, the Nikkei's biggest percentage gainer, soared 8.65% after the drugmaker said its experimental therapy for a potentially life-threatening kidney disease more than halved severe levels of protein in the urine of patients. On the other end, iSpace was poised to fall by the daily limit for the second straight session after its second failed attempt to put a lunar lander on the moon last week. The stock was set to slide 20%, with offers to sell outnumbering bids by 9-to-1.
Business Recorder
23 minutes ago
- Business Recorder
Asian shares climb, dollar eases ahead of US-China talks
TOKYO: Shares jumped and the dollar pared recent gains on Monday as Asian markets reacted to better-than-expected US jobs data ahead of talks in London aimed at mending a trade rift between the United States and China. Wall Street stocks had closed sharply higher on Friday after the jobs data eased concerns about damage to the world's biggest economy from President Donald Trump's unpredictable tariff regime. Safe-haven assets such as gold remained lower after steep selloffs. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5% in early trade on Monday. Hong Kong's Hang Seng Index surged 1.3%, touching the 24,000-point level for the first time since March 21. Japan's Nikkei stock index rose 0.9%. At the same time, a standoff in Los Angeles that led to Trump calling in the California National Guard to quell demonstrations over his immigration policies weighed on sentiment. The dollar slid 0.3% against the yen to 144.39, trimming its 0.9% jump on Friday. The European single currency was up 0.2% on the day at $1.1422. Top trade representatives from Washington and Beijing are due to meet for talks expected to focus on critical minerals, whose production is dominated by China. The discussions follow a rare call last week between Trump and Chinese President Xi Jinping. 'Trade policy will remain the big macro uncertainty,' said Kyle Rodda, a senior financial market analyst at 'Signs of further momentum in talks could give the markets fresh boost to kick-off the week.' US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will represent Washington in talks with China, Trump said in a social media post. Asian stocks rise as traders weigh US debt, trade deals China's foreign ministry said Vice Premier He Lifeng will be in Britain for the first meeting of the China-US economic and trade consultation mechanism. US employers added 139,000 jobs in May, data showed on Friday, fewer than the 147,000 jobs added in April, but exceeding the 130,000 gain forecast in a Reuters poll of economists. Attention now turns to inflation data on Wednesday that will feed into expectations for the timing of any rate cuts by the Federal Reserve. Markets are facing 'mixed fortunes' on Monday as they balance optimism over trade and the US economy against the potential for social unrest in California, said Jeff Ng, Head of Asia Macro Strategy at SMBC. 'The trade talks, if there's any progress, may help as well, but markets may not have priced in a lot of breakthrough for that,' Ng said. 'In the meantime, we are also quite cognizant that in the US there are protests in L.A. and the National Guard is also being sent in, so we have to be on the watch for event risk as well.' Spot gold fell 0.2% to $3,303.19 an ounce. US crude was little changed at $64.56 a barrel after a two-day gain.
Business Recorder
23 minutes ago
- Business Recorder
Dollar steadies after rally, focus shifts to US-China trade talks
The dollar held steady against all major currencies on Monday, as exuberance over an upbeat US employment report gave way to caution ahead of pivotal US-China trade talks set to take place in London later in the day. The talks come at a crucial time for both economies, with China grappling with deflation and trade uncertainty dampening sentiment among US businesses and consumers, prompting investors to reassess the dollar's safe-haven status. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are expected to represent the US at the trade talks, while vice premier He Lifeng would likely be present with the Chinese delegation. 'A deal to keep talking might be better than nothing, but unless we see a concrete breakthrough, the impact on sentiment is likely to remain muted,' said Charu Chanana, chief investment strategist at Saxo Markets. Friday's upbeat US jobs report yielded some relief for investors following other bleak economic data last week. The dollar advanced against major peers after the employment report, which cut weekly declines in the dollar index by more than half. However, it is still down by more than 8.6% for the year. On Monday, the yen firmed 0.10% at 144.750 per dollar, as data showed Japan's economy contracted at a slower-than-expected pace in the January-March period. The Swiss franc was steady at 0.8221 per dollar by 0041 GMT. The euro was last flat at $1.1399, while the sterling fetched $1.3535. The dollar index, which measures the US currency against six others, was steady at 99.169. The yield on 10-year Treasury notes was flat in early Asia trading, after a more than 10 basis points jump on Friday. New Zealand's dollar last bought $0.6020, while the Australian dollar inched up 0.1% at $0.65 in light volumes as markets were closed for a public holiday. An inflation report out of the US for the month of May will be in the spotlight later in the week as investors and Federal Reserve policymakers look for evidence on the damage trade restrictive policies have had on the economy. Fed officials are in a blackout period ahead of their policy meeting next week, but they have signalled that they are in no rush to cut interest rates and signs of better-than-feared economic resilience are likely to further cement their stance. Dollar rises against major peers Interest rate futures indicate that investors are anticipating the central bank may cut borrowing costs by 25 basis points, with the earliest move expected in October this year, according to data compiled by LSEG. 'May is the first month where the impact of Trump's 10% universal tariff on imports ex-USMCA is expected to show. The Fed will want a few months of inflation data in order to judge the tariff impact and most importantly, its persistence,' analysts at ANZ Bank said. Elsewhere, China's offshore yuan was last at 7.187 per dollar ahead of inflation and trade data.
