Editor’s Note
Richemont’s latest quarterly results showcase robust demand in key segments, yet the stock’s recent performance raises questions about market sentiment. This article examines the figures behind the growth and the potential factors influencing investor confidence.
Richemont once again exceeded expectations in the third quarter. Tailwinds came particularly from the persistently strong demand for jewelry and a gradual recovery in China. However, after a strong rally, the stock is now losing momentum. What lies behind this?
In the third quarter, sales rose by approximately four percent to 6.4 billion euros. On a currency-neutral basis, the increase was eleven percent, one percent more than in the same quarter last year. Analysts had expected only eight percent.
The development was once again driven by the jewelry business, which grew by 14 percent on a currency-neutral basis. The watch segment also recorded a sales increase of seven percent. Overall, the jewelry division, with revenues of 4.8 billion euros, remained by far the largest revenue driver for the group.
The Americas performed particularly strongly with a plus of 14 percent, Japan with 17 percent, and the Middle East and Africa with 20 percent. In Europe, sales increased by eight percent. In Asia excluding Japan – the group’s most important regional market – revenues grew organically by six percent, slightly exceeding analyst expectations of around five percent.
Richemont reported that sales in China, Hong Kong, and Macau combined rose by two percent, primarily thanks to solid development in Hong Kong. This marks the second consecutive quarter of positive growth in this region.
He maintained his buy recommendation with a price target of 190 Swiss francs.
Furthermore, concerns about the luxury group’s margins weighed. Adam Cochrane of Deutsche Bank emphasized that the positive effects from price increases in revenue development are necessary to offset margin pressures from currency impacts, US tariffs, and rising gold prices.
The growth in China is encouraging and the strong development in America proves Richemont’s resilience. The stock remains on the recommendation list; a larger correction offers an attractive entry opportunity.
Richemont sets the bar high for other luxury companies. Next week, industry giant LVMH will report its figures, followed by Kering and Hermès in February.