LONDON —Richemont has begun 2025 with a bang, surprising the markets with a 10 percent uptick in third-quarter revenue that sent luxury share prices soaring.
Following an unexpectedly strong Christmas trading statement, Richemont shares closed up more than 16 percent on Thursday, leaving investors wondering whether the dark days of luxury are coming to an end.
Richemont’s performance had a halo effect on the shares of luxury peers including LVMH Moët Hennessy Louis Vuitton, which rose more than 9 percent, and Kering, which was up more than 6 percent.
Richemont said that in the three months to Dec. 31, sales surged 10 percent to 6.2 billion euros with double-digit gains in all regions except for China, where demand continues to stagnate. The revenue figure beat consensus by 9 percent.
Richemont, parent of brands including Cartier, Van Cleef & Arpels, Chloe, Dunhill, IWC and Vacheron Constantin, described the holiday trading period as “very solid,” trumpeting the numbers as the highest quarterly sales in the company’s history.
A Van Cleef & Arpels carved emerald necklace with rubies and diamonds that once belonged to Sunny von Bulow.
Bernstein’s Luca Solca said the third-quarter results “smashed” expectations, while Piral Dadhania of RBC Capital Markets called the numbers “exceptionally strong.”
Thomas Chauvet of Citi said he is expecting the numbers “to support Richemont shares and a broader luxury sector, which has been out of favor for the past 18 months.”
All categories, with the exception of watches, posted double-digit increases due to a variety of factors including a surge in consumer confidence following the U.S. presidential election; stock market highs in the third quarter, and a strong dollar.
Sales in the jewelry division rose 14 percent compared with analysts’ projections of 4 percent. The increase came from all price points, and types of collections. Cartier’s Trinity, Panthère, Juste un Clou and Santos collections, and Van Cleef’s Alhambra and Flora designs were among the top sellers.
A Cartier Panthère watch
At the specialist watchmaking division, sales grew across all regions with the exception of Asia-Pacific.
Richemont said double-digit increases in the Americas, and Middle East and Africa regions helped to limit sales declines to 8 percent, compared with 16 percent in the first half of the year. Analysts had been expecting watch sales to be down 14 percent in the quarter.
Jefferies called the gains in jewelry “remarkable,” and noted a “sharper than expected reduction in pressures in watches, and more progress in soft luxury.”
The group’s “other” business area, which includes fashion and accessories, recorded an 11 percent rise in sales, with Watchfinder & Co., which specializes in pre-owned watches, growing in the double-digits.
Fashion and accessories maisons saw their sales increase by 7 percent due to “continued progress” at Alaïa and Peter Millar, and the contribution of the Gianvito Rossi brand, which was consolidated on Feb. 1, 2024.
All geographic regions showed double-digit growth except Asia-Pacific, which contracted by 7 percent due to an 18 percent decline in mainland China, Hong Kong and Macau.
Other Asian markets saw their performance improve, with positive results in most countries, and double-digit growth in South Korea, according to Richemont. In Japan, spend from tourists and locals continued to drive sales, which increased by 19 percent compared to the prior-year period.
In Europe, sales were up 19 percent, fueled by higher domestic demand and tourist spending, mainly from North American and Middle Eastern customers. Richemont said all the main countries in Europe recorded a rise in sales, with “notable performances” in France, Switzerland and Italy.
In the Americas, sales were up 22 percent, with increases across all business areas on the back of strong local demand. Sales in the Middle East and Africa rose by 20 percent, led by the UAE and higher tourist spending.
In the nine-month period to Dec. 31, sales increased by 4 percent at constant exchange rates and by 3 percent at actual rates. The slowdown in luxury demand weighed heavily on Richemont’s balance sheet in the first half, which is why the 10 percent uptick came as such a surprise.
The luxury giant’s net cash position on Dec. 31 rose to 7.9 billion euros from 6.8 billion euros in the corresponding period last year. That figure excludes Yoox Net-a-porter’s net cash position of 0.2 billion euros.
Alaïa spring 2025
YNAP saw sales drop 15 percent at constant exchange rates, and 14 percent at actual rates in the third quarter, reflecting the ongoing difficulties that online fashion and luxury retailers are facing. Richemont confirmed that YNAP’s sale to Mytheresa, set for later this year, is on track.
While the markets may be celebrating Richemont’s sales surge, it remains unclear whether the results signal better times ahead for luxury — or just for Richemont.
In its report, Jefferies attributed the rising sales to a number of factors specific to the company.
The bank described Richemont as “the liquid, high-beta luxury name of choice” due to “ample demonstrations of its ability to prevent gross margin shocks despite challenges in watches; ongoing strong market share gains in jewelry, and a newfound willingness to tackle underperforming brands under a new management structure.”
As reported, Richemont made major management changes in 2024, naming Nicolas Bos, formerly chief executive officer of Van Cleef & Arpels, to the reestablished role of group CEO.
Bos has more responsibilities and reports than his predecessor CEO Jérôme Lambert, who remains on the board and who has taken up the role of chief operating officer, reporting to Bos.
Nicolas Bos at the annual L.A. Dance Project Gala in Los Angeles.
Bos’ appointment triggered a series of management changes at the Richemont brands, part of a wider succession plan devised by the group’s founder and chairman Johann Rupert.
Citi, too, is bullish on Richemont. “We see it as a fundamentally stronger business than during prior industry downturns of 2001-03; 2008-09, and China’s political leadership change in 2013-15. It is our top pick for the next 12 months,” wrote Thomas Chauvet.
Chauvet added that Richemont now benefits from “greater scale and a more balanced product and geographic mix; a higher and more agile supply chain and shorter production lead times; tighter control over distribution and cleaner inventories in wholesale, and a stronger balance sheet.”
In its 2025 Outlook report published earlier this week, Barclays called out Richemont as a preferred stock.
“In the current setting, we think that winning names should have one of the following criteria: High exposure to high-end consumers, who are more resilient; high exposure to the U.S. cohort; strong pricing power, and solid brand momentum,” Barclays said.
It added: “Richemont is one of our preferred names as the group has emerged as a defensive play by delivering a solid, top-line growth performance [in 2024] in its core [jewelry] division. Although Richemont is also hurt by the weaker Chinese market, the group has been able to partly offset that with the good performance of other markets like Europe and Americas.”
A Cartier Love bracelet.
Richemont has also kept customers on side by keeping price hikes to a minimum, despite the surge in the value of gold.
In the past, Richemont has said it does not use prices to fatten margins, and that its priority is to offer value to customers, whether they’re paying thousands or hundreds of thousands for a piece of jewelry or other luxury item.
That strategy, however, could be a double-edged sword.
Wan Nurhayati, equity analyst at CFRA Research, said Thursday that Richemont’s strong third-quarter numbers “provide some comfort amid fears of a downturn in the demand for luxury goods. Nevertheless, higher raw material costs (notably gold) and limited price increases could continue to weigh” on Richemont’s margins.
The broker remains bullish on Richemont, lifting its 12-month price target to 147 Swiss francs from 140 Swiss francs, based on the third-quarter results.
