Editor’s Note
Despite significant economic pressures, including soaring gold prices and new tariffs, Richemont’s jewelry division has demonstrated remarkable resilience. The following article details how the luxury group’s core brands achieved strong double-digit growth, defying broader market headwinds.
LONDON — Spiraling gold prices, hefty U.S. tariffs and price hikes have failed to deter luxury customers’ appetite for Richemont’s fine jewelry brands, which outstripped analysts’ expectations and notched double-digit growth in the first fiscal half ended Sept. 30.
First-half sales at Richemont’s jewelry division, which Jefferies described Friday as “a remarkable locomotive for growth,” rose 14 percent to 7.75 billion euros at constant exchange. In the second quarter sales were up 17 percent.
Richemont said all regions delivered double-digit growth in jewelry with the exception of Japan, which was flat.
Jefferies said Richemont is now the fastest growing luxury company, while Citi proclaimed “All that glitters is Cartier,” in its latest report on the Swiss watch and jewelry giant. The banks were expecting the division to climb 10 percent in the second quarter, so the 17 percent hike came as quite a surprise.
It wasn’t just big spenders buying high jewelry at lavish events around the world.
Richemont’s chief executive officer Nicolas Bos said the second-quarter bounce came from “sustained local demand”; from established and new collections, such as Cartier Love Unlimited and Flowerlace from Van Cleef & Arpels, and from a variety of price points.
He said some people might buy a Van Cleef & Arpels Alhambra bracelet, or a Cartier Love bracelet, instead of fashion accessories which might have similar prices.
Bos added that a new mindset has been emerging since the end of the post-pandemic shopping frenzy. Right after COVID-19, luxury shopping habits were driven by a YOLO, “You only live once” mentality, while today, they’re more in a YONO, “You only need one,” state of mind.
And they’re not afraid to splash out.
Richemont’s chairman Johann Rupert added that the group’s jewelry houses also benefit from their heritage and high-profile branding.
Following Friday’s results announcement, Rupert was bullish on more than just the jewelry division.
He said his hope was that U.S. tariffs on Swiss exports would come down following ongoing negotiations between the Swiss and U.S. governments. Later in the day, he got his wish. Those negotiations were ultimately successful for Switzerland, which saw tariffs slashed to 15 percent from the current 39 percent, in line with those of the European Union.
Rupert stressed that, despite having joined South African president Cyril Ramaphosa at a meeting in the Oval Office with U.S. President Donald Trump earlier this year, he had nothing to do with the trade talks and was not part of the Swiss delegation.
He described the tariff tussle between the U.S. and Switzerland as a “misunderstanding,” and said his hope was that it would be “cleared up” soon.
Richemont said the impact of tariffs had so far been contained at around 50 million euros in the first half. That figure risked rising to 300 million euros for the full year if Switzerland and the U.S. had not come to an agreement.
Richemont’s watch division would have borne the brunt of the tariff damage at a time when it has just begun to show some green shoots.
Watch sales, which have been hammered by declining demand, especially in China, were down 6 percent to 1.56 billion euros at reported exchange, and down 2 percent at constant rates in the first half.
In the second quarter they rose 3 percent at constant exchange, driven by sequential improvement in all regions. Double-digit growth in the Americas region offset declines in Asia-Pacific and Japan, while demand in China, Macao and Hong Kong remained “soft” despite the second-quarter improvement.
In addition to tariffs, the watch division also suffered from rising gold prices and currency fluctuations in the first half. Operating profit fell nearly 70 percent to 50 million euros compared with the corresponding period last year.