Cartier owner Richemont’s sales rise 10% in third quarter, China weakness persists

Cartier owner shares Richemont jumped on Thursday after the luxury group reported a 10% rise in fiscal third-quarter sales, even as demand from 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, what the Swiss luxury brand called its “highest-ever quarterly sales figure.” That was well above the 1% increase expected by analysts in a consensus cited by RBC, according to Reuters.

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

Other luxury stocks christian dior, LVMH and Hermes rose as the results marked a positive sign for the health of Europe’s luxury sector during the Christmas 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 regions of Mainland China, Hong Kong and Macau.

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

The Swiss company’s share price has faced volatility over the past year amid a shake-up of its top management and broader fluctuations in the luxury market.

Shares rose after the May meeting new general director Nicolás Bosformer director of the group’s Van Cleef & Arpels jewelry brand. Currently, the stock is up 28.75% year-over-year.

The results mark a return to growth for the company, which reported a 1% year-over-year decline in first half sales to September, citing a challenging macroeconomic backdrop and tougher conditions in China. Sales during that semester amounted to 10.1 billion euros.

Until then, the high-end group had been an outlier in a broader crisis in the luxury sector, posting record numbers. year-round sales in May.

Luca Solca, senior global luxury goods analyst at Bernstein, said Thursday’s results provided a positive early sign for the broader luxury sector’s return to health.

Europe and the Asia-Pacific region, excluding greater China, “have seen strong sequential improvements, driven by higher domestic demand and strong tourist flows, while the Americas continue to be driven by strong local demand,” Solca said in a note.

“We view this as an encouraging sign and confirmation, as the market has anticipated in recent weeks, that 3Q24 may have been a low point,” he added, referring to the third calendar quarter through September.

Citi analysts added that they expect the strong results to “support Richemont’s stock and a broader luxury sector that has been out of favor over the past 18 months.”