Editor’s Note
This analysis of Compagnie Financiere Richemont is based on Morningstar’s independent assessment, including a CHF 172 Fair Value Estimate, a Wide Economic Moat rating, and a 3-Star rating. The note highlights the company’s strong Q3 sales performance.
Fair Value Estimate: CHF 172
Morningstar Rating: ★★★
Morningstar Economic Moat Rating: Wide
Morningstar Uncertainty Rating: Medium
Richemont reported another strong set of third-quarter sales, with an 11% constant currency increase, driven by Jewellery Maisons (up 14%) but with improving trends in watchmaking (up 7%).
Richemont’s solid third quarter, despite a more challenging comparison base (10% increase in the third quarter of 2024-25, versus negative 1% in the second quarter of the same year), confirms our expectations for gradual improvement in luxury trends together with its continued outperformance versus peers.
All regions displayed growth, with Americas, Japan, and the Middle East increasing at a double-digit pace. Sales in China were up 2%, a slower pace versus the 7% increase in the second quarter. Recovery in Chinese consumer demand remains important for the luxury sector thesis.
Richemont’s largest and most profitable division, Jewellery Maisons, continued to outperform with a 14% increase in the third quarter. Like jewelry peers, Richemont is grappling with steep precious metal price increases, which the company so far addressed with moderate price increases. We believe that Richemont is better positioned in this sense versus more affordable peers given its brands’ pricing power and affluent client base.
We are maintaining our CHF 172 fair value estimate for wide-moat Richemont as we update our current-year forecasts to incorporate more significant currency and raw material price headwinds. We believe Richemont is well positioned for long-term benefit from the strength and pricing power of its brands and more favorable underlying growth trends of the jewelry industry.
