Cartier owner Richemont sales rise 10% in Q3, China weakness remains

Shares of owner Cartier Richemont jumped on Thursday after the luxury goods group reported a 10% rise in sales in its fiscal third quarter, even as demand in China weighed.

Sales rose to 6.2 billion euros ($6.38 billion) at constant exchange rates in the three months to the end of December, in what the Swiss luxury brand said was its “highest ever” quarterly sales performance. This was much more than the 1% increase expected by analysts in the consensus cited by RBC, according to Reuters.

Richemont shares were up 17.15% at 8:10 a.m. London time.

Other luxury promotions Christian Dior, LVMH and Hermes moved higher on results marked by a positive signal for the health of Europe’s luxury sector during the holiday shopping period.

Richemont reported double-digit growth in all regions except Asia Pacific, where sales fell 7%, led by an 18% drop in the combined Mainland China, Hong Kong and Macau regions.

China, once a major driver of demand for luxury goods, has been a major drag on the sector as it struggled to emerge from the macroeconomic downturn following the Covid-19 pandemic.

The Swiss company’s share price has faced volatile growth over the past year amid a senior management overhaul and broader volatility in the luxury market.

Shares jumped at the May appointment new CEO Nicolas Bosformer head of the jewelry brand of the Van Cleef & Arpels group. The stock is currently up 28.75% for the year.

The results mark a return to growth for the company, which reported a 1% year-over-year decline sales in the first half of the year through September, citing a challenging macroeconomic backdrop and tighter conditions in China. The volume of sales for this six-month period amounted to 10.1 billion euros.

The high-end group had until then been a standout in the wider luxury slump, reporting a record sales for the whole year in May.

Luca Solca, senior global luxury analyst at Bernstein, said Thursday’s results provided a positive early signal for the broader luxury sector’s recovery.

Europe and the Asia-Pacific region, excluding greater China, “posted strong sequential improvements driven by higher domestic demand and strong tourist inflows, while the Americas continued to be driven by strong domestic demand,” Solka said in a note.

“We take this as an encouraging sign and confirmation – as expected by the market in recent weeks – that 3Q24 may have been low,” he added, referring to the calendar quarter to September.

Analysts at Citi added that they expected the strong results to “support Richemont shares and the broader luxury goods sector, which has been out of favor over the past 18 months.”