Editor’s Note
Richemont’s latest financial report highlights significant pressure in the Chinese luxury market, with CEO Nicolas Bos acknowledging competitive challenges, including from brands like Lao Pu Gold. This reflects broader shifts in consumer preferences and market dynamics in one of the world’s key luxury regions.
Richemont Group, one of the world’s three largest luxury conglomerates, released its fiscal year 2025 financial report on May 16, covering the period ending March 31. Notably, Richemont CEO Nicolas Bos rarely admitted that the current Chinese market is under pressure. Regarding competitors threatening its market position, he stated:
Richemont’s group revenue grew 4% at actual exchange rates to €21.4 billion for the fiscal year. Full-year operating profit was €3.76 billion, down 1% year-on-year, with the operating margin declining to 20.9%, a decrease of 240 basis points compared to the previous year.
Regionally, the Asia-Pacific market, which includes China, saw a 13% decline in annual revenue, making it the only core market to record a double-digit drop. Within this region, the Chinese market plummeted by 23%. During the post-earnings conference call, when asked by analysts about the impact of Lao Pu Gold, Richemont CEO Nicolas Bos stated that the jewelry market remains a largely unbranded or low-branded market, and the group’s primary task is still to capture share from this unbranded segment. He noted that a healthy market sees new players emerging in different markets and cultures.
Founded in 2009, Lao Pu Gold was the first brand in China to promote the concept of “ancient method gold” and is the country’s leading professional brand for ancient handmade gold artifacts, ushering in a new product era for China’s gold industry. It has been listed in the “Hurun Best of the Best – Chinese High Net Worth Individuals Brand Preference Report” for three consecutive years since 2023.
Meanwhile, global investment bank Morgan Stanley, in a recent research report on Richemont, also stated that the competitive threat from Chinese gold jewelry brand Lao Pu Gold to Cartier is still expanding and requires close scrutiny. Cartier contributes over half of Richemont’s sales revenue and more than 70% of its profits. Pressure on this brand in the Chinese market is considered a primary reason for the group’s weakness in the Asia-Pacific region.
The report analyzes that in 2024, Lao Pu Gold’s single-store sales reached $45.5 million, surpassing Cartier, Van Cleef & Arpels, and Tiffany & Co. (the latter ranging from $28-35 million), and potentially even exceeding Louis Vuitton’s 2024 level in China. As a domestic Chinese brand, Lao Pu Gold has entered the competitive arena of international first-tier luxury brands.
The report believes that Lao Pu Gold’s outstanding performance is enough to颠覆 the once widely held perception that European luxury brands have solid moats and are not threatened by any local competitors globally, including Chinese brands.
The report analyzes that Lao Pu Gold’s precise positioning in building a high-end brand and factors such as its product cultural heritage attributes are the main drivers of its explosive growth, “accurately capturing the rising cultural pride of ‘Guochao’ (national trend) among local consumers.” Furthermore, compared to European jewelry brands that primarily use karat gold, Lao Pu Gold’s products, made of pure gold or gold-containing materials (such as gold inlaid with gemstones), are more attractive to Chinese consumers.
According to Visible Alpha consensus forecasts cited in the report, Lao Pu Gold’s sales may reach $3.3 billion by 2026, representing an 18-fold growth over five years.