Editor’s Note
While Richemont’s watch brands face headwinds, its powerhouse jewelry maisons—Cartier and Van Cleef & Arpels—are driving exceptional growth, significantly outperforming the broader luxury sector.
Branded jewelry with superstar Cartier overshadows the weak performance of Richemont’s watch brands. The stock is rising significantly.
Cartier watches – here at the Watches & Wonders 2025 trade fair – are a success story in an otherwise difficult watch market.
Richemont remains very strong in branded jewelry. Cartier and Van Cleef & Arpels are generating sales growth that overshadows other luxury goods conglomerates. By now, the Italian brand Buccellati, acquired in 2019, likely also counts among the successful brands.
The jewelry brands’ sales rose 8% to €15.33 billion in the fiscal year ending March. Thus, almost three-quarters of the group’s annual sales of €21.4 billion are generated by manufacturers of necklaces, rings, and bracelets, which include the “maisons” Cartier, Van Cleef, and Buccellati, as well as the smaller Italian brand Vhernier, which joined last year.
Cartier has belonged to Richemont, or rather to its founder, chairman, and controlling shareholder Johann Rupert, for three decades. The impact of this brand, founded in 1847, on customers is currently hard to surpass.
Consequently, Richemont’s dominant position in branded jewelry has massive implications for how the stock is viewed today. The market reaction to Friday morning’s annual figures was a price increase in day trading of up to over 7% at times.
There was some good news: Richemont has been able to grow significantly in all sales regions of the world except Asia and Pacific countries in the past fiscal year, highlighting a favorable regional mix. It has increased its already very strong reserves to more than €8 billion, raised its equity ratio, and now plans to increase the dividend from 2.75 to 3 Swiss francs per share. The loss-making online platform Yoox Net-a-Porter (YNAP) was sold without major damage.
Without the performance of Richemont’s jewelry brands, the picture would be only half as bright. Richemont lives off the commercial halo of a few brands. On the stock market today, it can be compared to successful luxury goods manufacturers like Hermès or Brunello Cucinelli, each of which lives on just one brand.
In contrast, the Geneva-based group differs from the large French houses LVMH or Kering, which are equated with a larger number of brands and have significantly less success with jewelry than Richemont. LVMH, for example, has not yet brought the American jeweler name Tiffany & Co. to where Richemont currently stands with Cartier or Van Cleef.
The market reaction to Richemont’s jewelry sales is remarkable. This is because the annual figures as a whole did not necessarily deserve a price fireworks display. Despite sales growth, the EBIT margin has fallen from 23.3% to 20.9%, reaching the lower end of what was expected. Richemont is investing heavily in expanding its network of exclusive boutiques and must cope primarily with the record-high gold price. The fact that profit has increased at the bottom line is partly due to the circumstances of the YNAP sale, where a write-down had less impact than feared.
Richemont feels the greatest burden with its watch brands. The Specialist Watchmakers reporting unit lost almost €0.5 billion in sales. Its most important market, China, remains weak. While a few brands such as the prestigious houses Vacheron Constantin and A. Lange & Söhne are holding up well, others among the eight Specialist Watchmakers brands like IWC, Panerai, or Jaeger-LeCoultre likely had a harder time.
The EBIT margin of the watch business has shrunk from 15.2% to 5.3%. But the market is looking much more at the operational performance of the jewelry houses. Cartier and its sister brands show an EBIT margin of 31.9%, down only 1.2 percentage points from the previous year. It’s still well above 30% – to the market’s delight.
Incidentally, it contributes to this picture that Richemont reports its presumably most successful watch brand Cartier not under Specialist Watchmakers but under the jewelry maisons. Cartier watches are estimated to generate sales of around €2.5 to over €3 billion. Above all, they are developing better than the overall watch market, as Chairman Rupert said in a conference call.
The triumph of the prestigious names in jewelry art alone has implications for the valuation of Richemont shares. Measured by the earnings estimate for the current fiscal year, the price-earnings ratio (P/E) amounts to 25. This is above the long-term average. The high P/E cannot be completely relativized, even when taking into account the substance of Richemont’s very strong brands in the valuation.