By Mimosa Spencer
PARIS (Reuters) - Racing owner Richemont beat expectations on Friday, with quarterly sales rising 7% as wealthy shoppers continue to snap up jewelry, helping the group outperform competitors in a decline in luxury goods.
Richemont also owns jewelry brand Van Cleef & Arpels and Watchmager Piaget, who said its jewelry sales increased 11% from sales a year ago as of the end of March in the fourth quarter. This offset the 11% decline in its watch sector, with sales in China lowering demand for luxury purchases as the country's property crisis shrinking.
Switzerland-based Richemont had a total sales of 5.17 billion euros ($58 billion) in the quarter, with a 7% increase in the Constant Currency, surpassing the 6% forecast in the visible Alpha consensus cited by HSBC.
JPMorgan said strong jewelry sales were “enough” to offset weaknesses in the watch, adding that Richmont “really shifted toward a part of higher quality, more profitable, more profitable and less cyclical.”
Richemont shared that it was up 5% on Friday morning.
The group caters to a very wealthy client, and analysts believe that luxury groups that rely more on fashion sales are more suitable for downturns than other luxury groups.
Vontobel analyst Jean-Philippe Bertschy said: “Richemont continues to gain a huge market share in jewelry.
Bertschy also tagged what he said was spectacular growth and profit, especially when compared to rival LVMH, which owns jewelry labels, Bulgari and Tiffany tagged, although he said Richemont was "impermeable" to the current turbulent environment.
Luxury groups have started a year with the hope that strong U.S. demand will result in the industry’s biggest downturn in years, but since mid-February, there has been more uncertainty about weakening U.S. economy and April tariff announcements.
Richemont stock has now risen 18% since the beginning of the year, while Hermes shares are also in line with the shares of super-wealthy shoppers, up 14%. LVMH and Gucci owner Kering fell by 20% and 25%, respectively.
Price Hikesrichemont executives, who are more cautious than their peers when raising prices during a massive surge in demand, said they are paying close attention to U.S. tariffs and will consider “all different options” to mitigate the impact while sticking to strategies to keep global prices at the same level.
"We will adjust," Richmont chairman Johann Rupert said in a phone call with reporters.
Cartier has used exchange rate movement as a key reason for price increases, which has raised prices in March.
U.S. tariffs may include 20% of European fashion fees if fully applied for 31% of watches made in Switzerland, but in April, U.S. President Donald Trump stopped most of the tariffs for 90 days, instead setting the general 10% responsibility rate at 10%.
Richemont's peer Hermes said it would pass all tariffs to customers in the United States.
Advisor Bain’s concerns about the global recession prompted a downward revision to lower its annual sales of luxury goods to a possible decline of 2% to 5%, after the industry fell 1% in 2024.
($1 = 0.8921 euros)
(Reported by Mimosa Spencer, other reports by Anna Pruchnicka in Gdansk; Editors of Friederike Heine, Barbara Lewis and Susan Fenton)