By John Revill
ZURICH, July 15 (Reuters) – Cartier brand owner Richemont gave a boost to the broader luxury sector on Wednesday after the Swiss-based group comfortably beat sales forecasts for its first quarter with accelerating demand for its jewellery and watches.
Richemont, which also owns Swiss watch brands Piaget and IWC, said its sales rose by 20% when measured in constant currencies to €6.33 billion ($7.24 billion) in the three months to the end of June.
The figure beat analyst forecasts for €5.90 billion in a consensus compiled by Visible Alpha, a “flabbergasting” result, said Bank Vontobel.
The result sent Richemont’s shares 6% higher in early trading, while the Stoxx European Luxury 10 index, which includes other industry heavyweights LVMH, Hermès and Kering, rose 2.5%.
Investors were encouraged by Richemont’s positive comments on the greater China region, where sales rose at a double-digit rate, although analysts said the lower exposure of other luxury groups to the fast-growing jewellery segment would limit any wider read-across.
Richemont’s jewellery business, which also includes Van Cleef & Arpels, Buccellati and Vhernier, saw its sales rise by 24%, much better than the 13.5% rate expected by analysts.
Bernstein analyst Luca Solca said Richemont was benefiting from growth at both ends of the luxury market, with demand for high-end jewellery among the ultra-wealthy and value-for-money products among aspirational consumers.
“When spending $3,000-$4,000, a middle-class consumer is more likely to favour jewellery over a bag for example because they can wear a ring, bracelet or necklace every day and it’s seen as having a longer life,” he said.
Growth in the jewellery business was broad-based, and not limited to high-end jewellery pieces, which are often one-off creations retailing for between $40,000 and more than $1 million each.
Richemont is the market leader in branded jewellery and dress watches, where demand in the luxury market is currently strong, said Kepler Cheuvreux analyst Jon Cox.
“Luxury buyers want products with intrinsic value and their buying is being supported by AI-enabled wealth creation,” he added.
Regionally, Richemont accelerated sales growth in the Americas and Asia regions during the April to June period, with strong demand in Hong Kong and Macau.
Sales in Europe also increased, while the Middle East shrugged off disruptions caused by the Iran conflict to see sales return to growth as local customers offset a drop in tourist spending, Richemont said.
($1 = 0.8744 euros)
(Reporting by John Revill, editing by Kirsti Knolle, Tomasz Janowski and Louise Heavens)
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