Richemont shares jump 6% as jewellery demand drives 20% sales growth
Swiss luxury group Richemont crushed analyst estimates with a 20% sales surge, signalling a potential turnaround for the high-end goods sector and lifting peer stocks.
Richemont posted €6.3 billion in sales for the three months ending in June, achieving 20% organic growth. This easily surpassed analyst forecasts of an 11% increase, pushing the Swiss luxury group's shares up 6% in early trading on Wednesday.
The outperformance was primarily driven by a 24% organic surge in its specialist jewellery division, which houses Cartier and Van Cleef & Arpels. This marked the unit's seventh consecutive quarter of double-digit growth. The strength of high-end jewellery stands in stark contrast to the current struggles of the broader luxury sector, where demand for handbags, shoes, and ready-to-wear fashion at rivals like LVMH and Kering has remained subdued.
Geographic momentum was highly concentrated but broad enough to lift all regions except the Middle East into double-digit territory. Japan led the way with a remarkable 36% year-on-year increase, closely followed by a 27% jump in the Americas. Greater China, encompassing Hong Kong and Macau, returned to double-digit growth, successfully offsetting a low single-digit decline in Mainland China. The Middle East, an area heavily disrupted by the regional conflict earlier this year, showed gradual improvement through the quarter to post 3% growth.
Outside of its core jewellery engine, Richemont's watch division recorded a solid 8% sales increase. The group's smaller fashion and accessories division, home to brands like Chloé and Alaïa, grew 9% on a like-for-like basis, indicating that its turnaround efforts are gaining traction.
The strong quarterly figures effectively kick-started the luxury sector's corporate reporting season. They are likely to fuel investor optimism that demand for high-end goods is finally strengthening after a protracted two-year slowdown. The immediate market reaction reflected this sentiment, lifting the entire European luxury sector, with LVMH, Kering, and Hermès all climbing more than 2%.
Analysts at Vontobel attributed the results to years of consistent execution. They wrote that Richemont is "in a league of its own," with "stratospheric sales growth" powered by retail strength and capital discipline "amid a challenging macro backdrop and relative to peers expected to post weaker results."
