© Reuters. The emblem of the luxurious items firm Richemont is pictured at its headquarters in Bellevue close to Geneva, Switzerland, June 2, 2022. REUTERS/Denis Balibouse/File Photograph
By John Revill
ZURICH (Reuters) -Cartier proprietor Richemont loved a surge in gross sales in China in its newest quarter, signalling on Thursday the resilience of the excessive finish of the luxurious market and sending shares of the Swiss watch and jewelry maker sharply larger.
China’s cooling financial system and ongoing property disaster have been a fear for the sector which has relied on the nation for progress in recent times and had hoped for a powerful rebound from strict COVID lockdowns there.
Britain’s Burberry posted decrease than anticipated gross sales progress in China in its last quarter of the yr and blamed a worsening slowdown in demand for luxurious items when it issued a revenue warning final week.
However for Richemont, one of many world’s largest luxurious teams after France’s LVMH, China’s enchancment helped push it in the direction of its highest ever quarterly gross sales within the three months to the tip of December, noting a sequential acceleration, with December being the strongest month.
Its shares surged practically 10% in Zurich, whereas shares in business bellwether LVMH, which reviews full yr gross sales on Jan. 25, had been up 2.5%.
Luxurious sector shares have misplaced floor since LVMH final October reported gross sales progress had come right down to a price of 9%, marking the tip of the robust, post-pandemic spending spree in the US and Europe.
Richemont stated in its newest replace that gross sales in China, together with Macau and Hong Kong, had been 25% larger, with Chinese language vacationers preferring to journey within the area fairly than heading additional afield.
“There are macroeconomic issues…however mainland China was double digit constructive,” Chief Monetary Officer Burkhart Grund instructed analysts.
“Total, I might say the Chinese language enterprise is rebuilding,” he stated, though the method might take years as an alternative of months and quarters for the luxurious business.
Richemont, which additionally owns Swiss watchmakers Jaeger-LeCoultre, IWC and Piaget, stated the ability of recognised manufacturers additionally helped the corporate. Its Cartier enterprise is the world’s largest jewelry label.
“In occasions of, for example, financial uncertainty…it helps to be a extremely recognised and extremely revered jewelry model by way of the ability of iconic product traces,” Grund stated.
“This reassures prospects not simply in jewelry, but in addition in watches.”
Jewelry was the star performer for Richemont, with gross sales up 12% through the third quarter, outpacing watches, the place gross sales rose 3%.
Total, Richemont stated its gross sales rose to five.59 billion euros ($6.09 billion) within the quarter, forward of market expectations.
With foreign money results eliminated, Richemont’s gross sales elevated by 8% in three months Dec. 31, higher than the 5% rise within the earlier three months however decrease than the 19% rise within the April to June interval.
Kepler Cheuvreux analyst Jon Cox described the outcomes as a “strong print”, additionally highlighting power within the Americas, the place gross sales rose 8%.
“Are we out of the woods for luxurious? Not by a protracted shot, and the primary half of 2024 is more likely to be difficult,” he stated.
“Nonetheless, I might be detest to wager towards the sector given its GDP multiplier traits, robust boundaries to entry and the place ‘Made in Europe’ is definitely a power and aggressive benefit.”
