Luxury goods conglomerate Richemont, the owner of Cartier, experienced a surge in sales in China during its latest quarter, demonstrating the resilience of the high-end luxury market. Despite concerns about China’s cooling economy and ongoing property crisis, Richemont’s sales in China, including Macau and Hong Kong, were 25% higher, contributing to its highest-ever quarterly sales in the three months ending December. The company’s shares rose nearly 10% in Zurich, signalling investor confidence in the luxury sector’s performance.
Richemont’s positive results stand in contrast to Burberry, which recently posted lower-than-expected sales growth in China and attributed it to a worsening slowdown in demand for luxury goods. However, for Richemont, China’s improvement, particularly in December, marked the strongest month, indicating a sequential acceleration.
The CFO of Richemont, Burkhart Grund, noted that while there are macroeconomic challenges, mainland China exhibited double-digit positive growth. He highlighted that Chinese tourists prefer regional travel, boosting sales in the local market. Grund acknowledged that the Chinese business is in the process of rebuilding, and while it may take years, the trend is positive for the luxury industry.
Richemont, a major player in the luxury sector alongside LVMH, owns renowned brands such as Cartier, Jaeger-LeCoultre, IWC, and Piaget. The company emphasised the strength of recognised and respected jewellery brands, especially during economic uncertainty. Jewellery outpaced watches, with a 12% increase in sales during the third quarter.
Despite challenges in the luxury sector, including a slowdown reported by LVMH in October, Richemont’s overall sales reached €5.59 billion ($6.09 billion) in the quarter, surpassing market expectations. Currency effects removed, the sales increased by 8% in the three months ending December, reflecting positive momentum.
Analysts view Richemont’s results as a “solid print,” with strength also observed in the Americas, where sales rose 8%. While uncertainties persist in the luxury sector, especially in the first half of 2024, analysts remain optimistic about the industry’s resilience, citing its GDP multiplier characteristics, strong barriers to entry, and the competitive advantage of “Made in Europe.”
