Cartier parent company Richemont Group’s sales increased by 10% in the third quarter, but the Chinese market remains weak

Cartier owner's shares Richemont Group The luxury goods group reported a 10% rise in third-quarter sales despite pressure on Chinese demand, sending its shares sharply higher on Thursday.

Sales rose to 6.2 billion euros ($6.38 billion) at constant exchange rates in the three months to the end of December, which the Swiss luxury brand said was its “highest ever” quarterly sales. That was well above the 1% growth consensus forecast by analysts at Royal Bank of Canada (RBC), Reuters reported.

At 8:10 a.m. London time, Richemont Group's share price rose 17.15%.

Other luxury goods stocks Christian Dior, LVMH and Hermes The results show a positive signal for the health of the European luxury goods industry during the holiday shopping period.

Richemont Group reported that all regions achieved double-digit growth except the Asia-Pacific region, where sales fell by 7%, with mainland China, Hong Kong and Macau falling by 18% combined.

China, once the main driver of demand for luxury goods, has been a major drag on the industry as the industry struggles to emerge from the macroeconomic recession following the Covid-19 pandemic.

The Swiss company's share price has experienced volatility over the past year amid changes in top management and broader volatility in the luxury goods market.

The company's shares rose following the appointment in May of Nicolas Bos, the former head of the group's Van Cleef & Arpels jewelry brand. The current share price is 28.75% higher than this year.

The results marked a return to growth for the company, which reported a 1% year-on-year sales decline in the first half to September amid a challenging macroeconomic backdrop and tougher conditions in China. Sales for the six-month period were €10.1 billion.

Until then, the high-end group had been an outlier in the broader luxury downturn, with full-year sales hitting a record high in May.

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

Solca said in a report that Europe and Asia Pacific (excluding Greater China) “both posted strong sequential improvements driven by higher domestic demand and strong tourist inflows, while the Americas continued to be supported by strong local demand driven”.

“As the market has expected in recent weeks, we view this as an encouraging sign and confirmation that the third quarter of 2024 may be a trough,” he added, referring to the third quarter through September. quarter.

Citi analysts added that they expected the strong results to “support Richemont's shares and the broader luxury goods sector, which has been out of favor over the past 18 months.”