Editor’s Note
This article discusses Richemont’s unexpectedly strong Q3 2024 sales, which have sparked optimism for a potential rebound in the luxury sector. The performance notably exceeded market forecasts.
Recently, Richemont’s Q3 2024 sales increased by a surprising 10% above expectations, raising the possibility of a rebound in the luxury industry. Has the luxury market entered a full recovery phase? Richemont recorded Q3 sales of approximately €6.2 billion (about KRW 9 trillion), a roughly 10% increase year-on-year. Notably, all regions except China showed double-digit growth rates, a figure that exceeds market expectations by a significant 9%.
This performance is stimulating investor sentiment and having a positive impact on the luxury industry as a whole. Immediately after the announcement, Richemont’s stock price surged over 16%, and the stock prices of LVMH and Kering Group also rose by over 9% and 6%, respectively.
However, a cautious approach seems necessary regarding whether this rebound signifies a recovery for the entire luxury market. Financial institutions such as Barclays and RBC Capital Markets analyzed that Richemont’s performance is attributable more to brand-specific factors than a broad industry rebound. For example, Richemont’s owned jewelry brands Cartier and Van Cleef & Arpels appear to have driven major sales growth through aggressive new product launches and store expansion. Particularly, jewelry has established itself as a more attractive choice for consumers compared to handbags due to its higher value for price.
Meanwhile, the sluggishness of the Chinese market could pose an obstacle to the luxury industry’s recovery. Johann Rupert, Richemont’s founder and chairman, warned that it will take more time for Chinese consumer demand to recover. Experts advise that maintaining cautious optimism is the best strategy rather than having excessive short-term expectations. While some brands may show sustained growth, it is premature to conclude that the entire luxury market has recovered. Experts explain that the upcoming 2024 annual results announcements will be a crucial inflection point. If companies do not report better-than-expected results or present additional growth strategies, stock price volatility could increase in the short term.
Writer
Samantha Conti / WWD
