Richemont Sales Jump on Strong Demand for Cartier
Richemont SA posted a rise in full-year sales as the continued popularity of its Cartier brand made the Swiss group more resilient than rivals like LVMH in a softening luxury-goods market.
Sales in the year ended March at Richemont's jewellery unit, which also includes Van Cleef & Arpels, rose 8 percent at constant exchange rates, the company said in a statement Friday. Analysts were expecting a gain of 7.54 percent. In the most-recent quarter, the division's revenue soared 11 percent.
Shares rose as much as 5.5 percent in early trading in Switzerland. As of Thursday, they had gained about 15 percent this year compared with a 17 percent drop for LVMH.
Richemont has managed to withstand the downturn in demand for high-end goods better than peers as jewelry, its biggest category, enjoys an enduring appeal with consumers even in times of uncertainty. French rival LVMH Moët Hennessy Louis Vuitton SE, which owns jewellery labels such as Bulgari and Tiffany, reported disappointing results in its most recent quarter amid weak demand for its Christian Dior bags.
The luxury market has been struggling to emerge from a period of sluggish growth caused in part by Chinese shoppers reining in costly purchases. The industry's outlook has grown even gloomier since US President Donald Trump last month began to impose tariffs on imports across industries and countries.
Still, Richemont, whose jewellery division generates about 72 percent of total group sales, had double-digit gains in revenue across nearly all of its markets in the most-recent quarter. Fourth-quarter group sales rose 16 percent in the Americas, 13 percent in Europe and 22 percent in Japan. While sales in the region that includes China fell 7 percent, the decline was nearly half the full year's drop.
'Richemont continued to gain significant market share in jewellery,' Jean-Philippe Bertschy, an analyst with Vontobel Equity Research, wrote in a note. 'Growth and profit are spectacular, especially when comparing to key competitor LVMH.' Still, the analyst warned that 'the company is not impervious to the current volatile environment.'
Richemont is looking at various options, including raising prices, to mitigate tariff pain and significant currency effects, Chairman Johann Rupert said on a call with journalists.
Richemont increased prices at its Cartier and Van Cleef & Arpels brands following Trump's tariff hikes, according to Jefferies. The company has also had to contend with higher gold prices. Gold, considered a safe haven, has risen more than 20 percent this year amid geopolitical tensions.
'This sales increase, combined with disciplined operating costs and targeted price increases, helped mitigate the impact of higher raw materials costs, notably gold, on our profitability,' Richemont said in the statement.
Meanwhile, Rupert said he remains optimistic on China. Chinese consumers are still scarred by the draconian lockdowns during the pandemic, he said. 'But it's a matter of time before they feel relaxed again, they have a lot of savings,' he added. 'I expect that when consumers get a bit more confident then things will return to normal.'
For the full year, the company reported operating profit of €4.47 billion ($4.48 billion), below the €4.55 billion estimated by analysts.
By Angelina Rascouet
Learn more:
Explainer: How Trump's Tariffs Threaten Luxury Fashion
The Trump administration's radical changes to US trade policy won't push retail prices up enough to directly dampen sales, but the effects on the global economy and consumer sentiment could seriously dent an industry still struggling to bounce back from a sharp downturn in demand.
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