Cartier owner Richemont beats sales forecasts as China recovery continues

[ZURICH] Cartier owner Richemont reported sales ahead of market expectations on Thursday (Jan 15), buoyed by strong global demand for jewellery and a continued recovery in greater China, its second-biggest market and a bellwether for the luxury sector.

The Swiss company’s shares rose 3 per cent on the reading, with investors looking for signs that the luxury goods industry can return to stable growth.

This comes in a year already marked by geopolitical turmoil and the bankruptcy of one of the sector’s largest retail groups, Saks Global.

The world’s second-largest luxury company, which also owns Van Cleef & Arpels and Buccellati, said that sales in its third quarter from September to December rose to 6.4 billion euros (S$9.6 billion). It is a 4 per cent year-on-year increase in reported currencies.

This beats an analyst consensus of 6.3 billion euros cited by Visible Alpha, and represents an 11 per cent increase when measured in constant currencies.

Richemont’s trading update provides the first clues on the demand for luxury goods going into 2026.

Louis Vuitton Moet Hennessy is due to report its annual results later in January, followed by Hermes and Gucci-owner Kering in February. Smaller Italian cashmere brand Brunello Cucinelli was the first luxury brand to report its quarterly sales this week.

The shares of sector peers, including watch company Swatch and Birkin-bag maker Hermes, rose in early trade following Richemont’s results announcement.

Chinese market continues growth rebound

Richemont highlighted continued improvement in China, Hong Kong and Macau, where its sales rose by 2 per cent.

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China accounts for nearly 20 per cent of the company’s sales, investment management firm Bank Vontobel estimated; the China market is ranked second behind the US one.

The greater China performance, “mostly led by solid activity in Hong Kong”, was the second quarter in a row that Richemont reported improved sales in the region, following a 7 per cent rise in the previous three months.

China has been luxury’s main growth engine in recent years, but the Chinese economy has been struggling with a sticky real estate crisis, and a shift in consumer appetite that have weighed on demand for Western brands.

Richemont’s reported trends from China “may be regarded as a pivotal moment”, said RBC analyst Piral Dadhania, adding that its performance is a positive signal for the wider luxury sector.

Sales by most European houses suffered heavy declines in China last year. Demand there is seen as a decisive factor for the luxury industry to return to sustained growth.

“The Chinese consumer holds the key to luxury and is thus the critical sector theme for 2026,” said Berenberg analyst Nick Anderson.

Jewellery up but gold prices, strong Franc pressure margins

Following two years of stagnation, analysts are becoming more optimistic about the US$400 billion luxury industry, with jewellery seen as a critical growth driver since inflation-wary shoppers view it as an investment rather than a mere treat.

Richemont’s jewellery sales were up 14 per cent, helped by the launch of novelty items such as bracelets and pendants, which tended to be slightly cheaper and were popular during the gifting season.

“Jewellery is in strong shape, and Richemont dominates it with its brands,” Bernstein analysts said.

The company’s watchmaking business, which includes the IWC and Jaeger-LeCoultre brands, lifted sales by 7 per cent.

Pressures on Richemont’s margins due to record-high gold prices and the strong Swiss franc, however, will likely persist. This could crimp the group’s profit outlook for the next business year, if not countered by more price increases, said analysts from Deutsche Bank.

A company spokesperson declined to comment on the bankruptcy of Saks Global, the owner of US department stores Saks Fifth Avenue, Bergdorf Goodman and Neiman Marcus.

Richemont is among the retailer’s top unsecured creditors. Saks owes about US$3.4 billion to creditors, while claims by the top 30 unsecured creditors are worth a total of US$712 million, bankruptcy filings show. REUTERS