Growth in China and the U.S. Offset the Decline in Europe
Richemont has exceeded market expectations in its Q3 performance, defying declines in Europe with robust growth in the US and China. In morning trading, Richemont’s shares experienced an 8% surge.
The Swiss luxury conglomerate reported an 8% year-on-year sales increase at constant exchange rates, reaching €5.6 billion for the quarter ending December 31, 2023. This performance surpassed consensus expectations of 7%, showcasing an acceleration compared to the previous quarter’s 5% growth.
The strong growth in Q3 was primarily attributed to the Asia Pacific region, which saw a notable 13% increase. This surge was fueled by a 25% leap in Mainland China, Hong Kong, and Macau. Richemont acknowledged that the impressive growth in China was based on favorable comparables, as the spike in Covid cases at the end of 2022 had disrupted footfall during that period. This performance stands in contrast to recent challenges faced by British luxury brand Burberry, which issued a profit warning due to lower-than-expected retail sales over the holiday season.
Meanwhile, its performance in the U.S. in Q3 came as an less-anticipated boost. The results suggest that American consumers are no longer waiting for European vacations to spend on luxury. Richemont’s sales in the Americas rose by 8 percent, driven by resilience in the economy – a contrast to Europe, where they fell 3 percent.
By division, jewelry — which includes Cartier and Van Cleef & Arpels — was most responsible for the solid performance, beating expectations to rise 12 percent. Sales in Richemont’s specialist watchmakers division, which features IWC, Piaget, and Jaeger-LeCoultre, were up 3 percent, in line with consensus.
The “other” business segment, which includes Chloé, Montblanc, and Alaïa, saw a 1 percent sales decline. “Lower wholesale and online retail sales were largely mitigated by mid-single digit growth in retail sales, markedly driven by the performance at Alaïa, Delvaux, Dunhill, and Peter Millar,” the company said in a statement.
