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Business Recorder
16-05-2025
- Business
- Business Recorder
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.
Asharq Al-Awsat
24-04-2025
- Business
- Asharq Al-Awsat
Gucci-owner Kering's Shares Down 5% after Q1 Sales Disappoint
Shares of Kering traded down 5% in European morning trade on Thursday, after the group reported a first-quarter sales drop that was worse than analysts' expectations. Kering after the market close on Wednesday posted a 14% decline in sales, with a 25% drop at flagship label Gucci, the latest signal the luxury sector faces another tough year. The sales report confirmed "a weakening backdrop" since February, said analysts at Jefferies, noting "the uncertainties around reigniting Gucci's desirability remain plentiful". The brand, which accounts for around two-thirds of group profits, is betting on in-house talent Demna to revive sales, but new designs will only arrive gradually at the end of the year, Reuters reported. The French luxury group flagged worsening sales in North America and Western Europe and said it expected sales to continue to fall in double digits, percentage-wise, in the second quarter, before starting to improve. This leaves the "heavy lifting" for the second half, which will likely depend on a recovery in Chinese demand, noted analysts at Bernstein. Prospects for the luxury industry, which had pinned hopes on growth from the United States to help pull it out of a slump as the Chinese market remains weak, have been darkened by recession fears prompted by US President Donald Trump's tariff announcements. As trade tensions have risen, Bellwether LVMH has fallen 23% and Burberry and Kering have both lost 30% since the start of the year. Hermes and Cartier-owner Richemont, viewed by analysts as better insulated from economic downturns because of their wealthier clientele, are up 1% and 3%, respectively. First-quarter reports from Kering's larger rivals last week also reflected the sector's slowdown and disappointed investors, with sales at LVMH's fashion and leather goods division down 5% while Hermes, which routinely outpaces expectations with double-digit growth, posted a 7% rise. Analysts at Deutsche Bank on Thursday lowered their 2025 earnings per share estimate for Kering this year by 13% to 8.65 euros ($9.84), citing the company's cautious outlook for the first half, and noting the slowdown in all regions except Asia was slightly worse than peers. TD Cowen lowered sales forecasts for Gucci this year by 15% to a 20% decline. The analysts added that Gucci, as well as another Kering label Yves Saint Laurent, were expected to be slower to raise prices to offset tariffs than peers. The Kering labels have a broader base of less-wealthy clients who are more reluctant to splash out in a choppy economic environment. LVMH, meanwhile, has raised prices of some Louis Vuitton handbags and leather goods by around 4% according to Bernstein and Barclays, while Hermes said it will pass on the full effect of tariffs to shoppers in the United States on May 1. US tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied, but Trump earlier this month paused most of his tariffs for 90 days, setting a general 10% duty rate instead. The price hikes from Vuitton are "more than enough" to offset even 20% tariffs, said Bernstein.
Al Arabiya
17-04-2025
- Business
- Al Arabiya
Hermes will raise US prices to fully offset Trump's tariffs, company says
France's Hermes will fully shift the burden of tariffs in the United States to its wealthy clientele, the company said on Thursday, as it posted first-quarter sales that slightly missed market expectations. Banking on its pricing power as one of world's most exclusive luxury brands, Hermes plans to add a premium to all products sold in the United States, coming on top of regular price adjustments, which were around 6 percent-7 percent this year. 'We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines,' said Finance Chief Eric du Halgouet. The company had flagged possible tariff-related price hikes in February. The brand known for its Kelly and Birkin handbags, which fetch upwards of $10,000, reported sales for the three months ending in March of 4.1 billion euros ($4.66 billion), a 7 percent rise on a constant currency basis. The performance fell below analyst expectations for 9.8 percent year-on-year growth, according to a VisibleAlpha consensus estimate cited by HSBC, slowing from an 18 percent surge in the previous quarter. Hermes's first-quarter sales follow sector bellwether LVMH reporting disappointing figures, even though Hermes still posted positive growth across all regions, which was partially hampered by low inventories. Keeping a tight grip on output levels, the company is sticking with production increases of 6 percent to 7 percent each year, which helps maintain the exclusive aura around its leather goods. Speaking to journalists on a call, du Halgouet said that going into April, the company has not observed any significant change in shopper behavior in the United States, where it still saw double-digit growth. 'Of course, we are cautious about the United States given the discussions, the geopolitical uncertainty which, as you know, have caused a great deal of volatility on the financial markets,' he said. The US tariffs could include a 20 percent charge on European fashion and leather goods and 31 percent for Swiss-produced watches if fully applied. Last week, Trump paused most of his tariffs for 90 days, setting a general 10 percent duty rate instead. Commenting on China, another key market, which is weighed down by a real estate crisis, du Halgouet said he has not seen any major signs of improvement, but added that recent government efforts to boost spending were a positive signal. In Europe, where sales were boosted by travelling Americans benefiting from a strong dollar at the start of the year, Hermes sales grew 13.3 percent. Du Halgouet, however, cautioned the positive trend might not last as the dollar has since weakened. The family-controlled company this week took LVMH's crown as the world's most valuableluxury group by market cap, despite much lower overall revenues and corporate size.
Yahoo
17-04-2025
- Business
- Yahoo
Hermes sales up 7% in first quarter, slightly missing expectations
By Mimosa Spencer and Tassilo Hummel PARIS (Reuters) -France's Hermes will carry out price hikes in the United States to fully offset the costs from President Donald Trump's tariff policies, the company said, as it posted first-quarter sales below market expectations in a rare show of weakness. Banking on its pricing power, Hermes intends to add a premium to all of its products sold in the country from May, coming on top of regular price adjustments which were around 6-7% this year. "We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines," said Finance Chief Eric du Halgouet, adding the company was still finalising the exact rates. The company known for its Kelly and Birkin handbags, which fetch upwards of $10,000, reported sales for the three months ending in March of 4.1 billion euros ($4.66 billion), a 7% rise on a constant currency basis. The performance fell below analyst expectations for 9.8% year-on-year growth, according to a VisibleAlpha consensus estimate cited by HSBC, slowing from an 18% surge in the previous quarter. Hermes's first-quarter sales miss was published days after sector bellwether LVMH reported disappointing figures, amid uncertainty in the global economy marked by trade tensions and recession fears. Speaking to journalists on a call, du Halgouet said that going into April, the company has not observed any significant change in shopper behaviour in the United States, where it still saw double-digit growth, partially limited by low inventories. "Of course, we are cautious about the United States given the discussions, the geopolitical uncertainty which, as you know, have caused a great deal of volatility on the financial markets," he said. The U.S. tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied. Last week, Trump paused most of his tariffs for 90 days, setting a general 10% duty rate instead. Commenting on China, another key market, which is weighed down by a real estate crisis weighing on the sector, du Halgouet said he has not seen any major signs of improvement, but added that recent government efforts to boost spending were a positive sign. ($1 = 0.8801 euros) Sign in to access your portfolio
Reuters
17-04-2025
- Business
- Reuters
Hermes sales up 7% in first quarter, slightly missing expectations
PARIS, April 17 (Reuters) - France's Hermes will carry out price hikes in the United States to fully offset the costs from President Donald Trump's tariff policies, the company said, as it posted first-quarter sales below market expectations in a rare show of weakness. Banking on its pricing power, Hermes intends to add a premium to all of its products sold in the country from May, coming on top of regular price adjustments which were around 6-7% this year. "We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines," said Finance Chief Eric du Halgouet, adding the company was still finalising the exact rates. The company known for its Kelly and Birkin handbags, which fetch upwards of $10,000, reported sales for the three months ending in March of 4.1 billion euros ($4.66 billion), a 7% rise on a constant currency basis. The performance fell below analyst expectations for 9.8% year-on-year growth, according to a VisibleAlpha consensus estimate cited by HSBC, slowing from an 18% surge in the previous quarter. Hermes's first-quarter sales miss was published days after sector bellwether LVMH reported disappointing figures, amid uncertainty in the global economy marked by trade tensions and recession fears. Speaking to journalists on a call, du Halgouet said that going into April, the company has not observed any significant change in shopper behaviour in the United States, where it still saw double-digit growth, partially limited by low inventories. "Of course, we are cautious about the United States given the discussions, the geopolitical uncertainty which, as you know, have caused a great deal of volatility on the financial markets," he said. The U.S. tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied. Last week, Trump paused most of his tariffs for 90 days, setting a general 10% duty rate instead. Commenting on China, another key market, which is weighed down by a real estate crisis weighing on the sector, du Halgouet said he has not seen any major signs of improvement, but added that recent government efforts to boost spending were a positive sign. ($1 = 0.8801 euros)
