Richemont sales unexpectedly jumped by double digits during the holiday shopping season as consumers splurged on Cartier jewellery, a tentative sign that demand for luxury goods may be recovering.
Sales soared 10 percent during the three months through December at constant exchange rates, Richemont said Thursday. Analysts had expected a gain of less than 1 percent. The Americas and Europe drove the performance, with purchases of expensive jewellery offsetting weak watch sales, which have weighed on the groupâs performance.
âWe view these results as exceptionally strong,â Piral Dadhania, an analyst at RBC Capital Markets, wrote in a note.
The performance lifted shares of Richemont by as much as 18 percent in early trading and boosted other luxury groups on optimism the worst may be over for the industry, which has faced cooler demand for high-end goods after years of aggressive price increases. Though Richemontâs greater exposure to jewellery gives it some insulation from the volatility of other fashion categories, rivals also rose on the news. LVMH gained as much as 8.6 percent in Paris, while Hermès International climbed 6 percent.
Even Richemontâs performance in the Asia Pacific region, where sales slid by 7 percent in the past three months, was much better than estimates. Only China, where shoppers have shown less appetite for luxury amid worries about the health of the real estate market, remained a weak spot, with sales dropping 18 percent in the quarter.
The final three months of the year is typically the most important period for luxury labels because of holiday shopping.
Richemont owns Cartier and Van Cleef & Arpels, two sought-after jewelry brands. This part of the market, known as hard luxury, often does better in times of uncertainty as jewelry tends to be more timeless than handbags and other fashion items. Richemontâs watch segment also did better than estimates, with revenue falling less than expected.
âAlthough still fragile, the market is showing signs of stabilisation,â in China, Vontobel analyst Jean-Philippe Bertschy wrote in a note. But overall, âdespite the challenging situation in China and in watches, Richemont has never been stronger,â he added.
Some companies catering to the very wealthy have weathered the luxury downturn better than those appealing to the less well-off.
Earlier this week, Brunello Cucinelli SpA posted strong quarterly revenue and forecast sales growth of 10 percent this year and next. The Italian brand sells cashmere and vicuña bomber jackets for â¬17,500 ($17,992.)
LVMH Moët Hennessy Louis Vuitton SE, the worldâs biggest luxury group, will report earnings on Jan. 28. The French company, led by billionaire Bernard Arnault, is more exposed to the so-called âsoft luxuryâ segment, which offers handbags and ready to wear fashions.
By Angelina Rascouet
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