Richemont Beat Expectations in Holiday Quarter

Richemont sales jumped to a record in the final months of last year as holiday shoppers splurged on its watches and Cartier jewellery, led by demand in the US and the Middle East.

Sales on a constant currency basis climbed 11 percent in the fiscal third quarter, the Swiss luxury group said in a statement on Thursday. That beat the 7.5 percent average estimate of analysts. Sales at the jewellery division rose 14 percent, also topping expectations.

All divisions generated growth, including specialist watchmakers with a 7 percent sales increase — a particularly strong figure given recent weakness in the wider watch market. US tariffs, foreign exchange and rising materials costs had lowered expectations for the unit that includes brands such as Jaeger-LeCoultre and Piaget.

Richemont shares advanced as much as 3 percent Zurich. Peers such as Swatch Group AG and Hermès International SCA also rose.

Through Wednesday, Richemont had climbed 26 percent in the prior 12 months, outperforming France’s LVMH, the world’s largest luxury group, which was little changed.

“Richemont sustained its growth trajectory and reinforced its leadership in the luxury sector,” said Jean-Philippe Bertschy, analyst at Vontobel. While its margins and free cash flow face ongoing pressure, the luxury giant’s brand portfolio, pricing power and balance-sheet strength stand out, he added.

Richemont has weathered a downturn in the luxury industry better than most of its rivals because of the appeal of its pricey rings and bracelets, which are often viewed as a better store of value than expensive apparel and leather goods.

In the December quarter, demand was strong in the Americas, while tourists from the Middle East stoked sales in Europe, the company said.

“Richemont has set a high bar to kick off this earnings season, with a strong print against elevated expectations and tough comparatives,” RBC analyst Piral Dadhania said in a note.

Swift Effect

Cartier is experiencing a strong boost in popularity as celebrities like Taylor Swift and Timothée Chalamet turbo-charge the desirability of its jewellery and diamond-encrusted watches.

The final months of the year are the most important for luxury labels because of holiday spending, and Richemont’s performance may boost hopes that the broader slump in the sector — particularly in China — is subsiding. Hong Kong sales lifted the company’s results in the region, while Japan also outperformed with a 17 percent increase.

Earlier this week, Brunello Cucinelli SpA posted a reassuring set of numbers according to analysts, who welcomed a relatively quiet release considering recent volatility in the sector. The Italian brand sells cashmere and vicuña bomber jackets.

By Allegra Catelli