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Richemont Shares Surge 16% After Strong December Quarter Sales Performance

Prime Highlights: 

Richemont, owner of Cartier, reported a 10% increase in fiscal third-quarter sales, reaching €6.2 billion ($6.38 billion) at constant exchange rates, marking its highest-ever quarterly sales. 

Despite a decline in sales in China (down 18% in mainland China, Hong Kong, and Macau), the company saw strong growth in other regions, particularly Europe and the Americas. 

Richemont’s shares surged 16.36% following the positive results, exceeding analysts’ expectations of a 1% growth. 

Key Background: 

Swiss luxury goods group Richemont, the owner of Cartier, reported a 10% increase in fiscal third-quarter sales, exceeding analysts’ expectations despite a slowdown in demand from China. For the three months ending December, the company recorded sales of €6.2 billion ($6.38 billion) at constant exchange rates, marking its highest-ever quarterly sales figure. The results provided a positive indication of the luxury sector’s health during the crucial holiday shopping period. 

Richemont’s share price saw a notable 16.36% increase following the announcement, reflecting investor optimism. The company’s strong performance was in contrast to expectations of a modest 1% growth, as projected by analysts. This surge in sales was driven by robust demand across all regions except for Asia Pacific, where sales fell by 7%, primarily due to an 18% drop in mainland China, Hong Kong, and Macau. 

The decline in sales in China, once a major driver of luxury consumption, has been attributed to the country’s post-COVID economic challenges, which have affected the wider luxury market. Despite this, Richemont’s sales growth in Europe and the Americas helped offset the downturn in Asia. The company’s results align with positive signals for the broader European luxury sector, with other major luxury brands like Christian Dior, LVMH, and Hermes also seeing stock price increases following the announcement. 

Richemont’s stock had been volatile in 2024, influenced by management changes, including the appointment of CEO Nicolas Bos in May. Bos, previously head of Van Cleef & Arpels, has since led the company to a 28.75% increase in its share price for the year. The company’s latest performance marks a recovery from a 1% year-on-year sales dip reported in the first half of the fiscal year, which was attributed to challenging macroeconomic conditions and weaker demand in China. Analysts suggest that the strong performance in the December quarter signals a potential recovery for the luxury sector, particularly as Europe and the Americas continue to show resilience in consumer demand.