Editor’s Note
This article highlights a notable shift in the Asia-Pacific market for Richemont Group, parent company of Cartier. While the group saw overall revenue growth, the region stood out as its only declining market in the last fiscal year, underscoring evolving regional dynamics in the luxury sector.
According to Fashion Business Express, Richemont Group, the parent company of Cartier, released its fiscal year 2025 performance report for the period ending in March. Group revenue grew by 4% at actual exchange rates to €21.4 billion. Revenue for the fourth quarter was €5.17 billion, a year-on-year increase of 7%. The group’s full-year operating profit was €3.76 billion, down 1% year-on-year, with the operating profit margin dropping to 20.9%, a decrease of 240 basis points compared to the previous year.
By division, the Jewellery Maisons, which includes brands like Cartier and Van Cleef & Arpels, achieved full-year revenue of €15.33 billion, an 8% increase at constant exchange rates. Fourth-quarter revenue grew 11% year-on-year, demonstrating stronger resilience for the jewellery category amid a global trend of more cautious spending by high-net-worth individuals.
In contrast, the Specialist Watchmakers business, which includes IWC and Panerai, continued its weak performance, with full-year revenue declining 13% to €3.28 billion, primarily impacted by the downturn in the Asia-Pacific market, which fell 27%. This division’s revenue decreased 11% year-on-year in the fourth quarter, significantly below the expected 5.7% decline, notably affected by the correction in the high-end watch market and inventory pressures.
The ‘Other’ segment, which includes fashion and accessories brands like Chloé and Dunhill, saw modest growth of 7%, with full-year revenue reaching €2.79 billion.
By channel, the group continued to emphasize its direct-to-consumer strategy. Retail channel revenue for fiscal 2025 grew 6% to €15.04 billion, accounting for 70% of total revenue. The online retail channel also saw double-digit growth, rising 11% for the full year. However, the traditional distribution channel continued to decline, down 3% year-on-year, with a 4% drop recorded in the fourth quarter, reflecting the group’s ongoing adjustments to wholesale inventory control and partner network optimization.
By region, the Asia-Pacific market, which includes China, saw full-year revenue decline by 13%, making it the only core market to record a double-digit drop, with the Chinese market plummeting 23%.
Although the Asia-Pacific market’s revenue decline narrowed to 7% in the fourth quarter, it still fell short of market expectations. The Asia-Pacific region remains Richemont’s largest regional market, contributing 33% of sales revenue, but this share has sharply dropped by 7 percentage points from 40% a year ago.
Meanwhile, the Americas, Europe, and Japan markets expanded their contribution to group revenue.
The Americas market grew 15% for the full year, increasing its revenue contribution from 22% in fiscal 2024 to 25%, making it the second-largest market. Growth in the Americas accelerated in the second half of the fiscal year, with a 16% increase in the fourth quarter, primarily benefiting from improved local foot traffic.
Europe grew 11%, with its contribution rising from 22% to 23%. The fourth quarter saw a 13% increase, maintaining stable growth, largely driven by robust local consumption and tourist spending from North America and the Middle East.
Japan became the biggest highlight this year, with full-year revenue surging 30% year-on-year, raising its contribution to 10%. The fourth quarter grew 22%, benefiting from the tourism boom to Japan and a rebound in local consumption. The Middle East and Africa region recorded 14% growth, contributing 9% to total revenue.
Amid global economic uncertainty and a cooling luxury market, Richemont’s high-margin pillar, the jewellery business, remains solid. However, the weak performance of the watch category and, most importantly, the performance of the group’s largest market are causing concern.
Cartier contributes over half of Richemont’s sales revenue and more than 70% of its profits. Market observers believe the pressure on the brand in China is a primary reason for the group’s weakness in the Asia-Pacific region.
Morgan Stanley released a report this week stating that the competitive threat from the Chinese gold jewellery brand Lao Pu to Cartier continues to expand.
The report points out that Lao Pu Gold has benefited from the “downgrading upgrade” trend among Chinese consumers due to its precise brand positioning. It is more upscale than traditional gold jewellery brands yet sits below the price threshold of traditional luxury brands like Cartier, quickly filling the market gap for ‘luxury but not overly expensive’ products.
Notably, Lao Pu Gold’s rapid growth has not been accompanied by large-scale expansion. As of March 2025, Lao Pu Gold had only 28 stores in China’s top-tier high-end shopping malls, a mere 47% increase from 19 stores at the end of 2021. However, its sales during the same period skyrocketed by 572%. Its average store productivity has already surpassed that of Cartier, Van Cleef & Arpels, and Tiffany in the Chinese market, and it even has the potential to surpass LV in China by 2025.
In contrast, Cartier’s performance in the Chinese market continues to face pressure. Richemont Group’s revenue in the region was €5.4 billion in fiscal 2022. According to the institution’s estimates, this is projected to drop to €4.2 billion in fiscal 2025, a decline of 22.4% over three years.
Although Cartier’s performance within the group is better than that of the watch division, facing direct competition from Lao Pu, 32% of its Chinese store network is already in the same shopping malls as Lao Pu, and 43% are in the same cities. Its market share is at risk of being eroded. In the high-end malls where Cartier stores are concentrated, customer overlap between the two brands is as high as 30% to 60%, posing potential pressure on Richemont’s future valuation.
During the post-earnings conference call, when asked by analysts about the impact of Lao Pu, Richemont Group CEO Nicolas Bos stated:
Group Chairman Johann Rupert was more direct, stating that Lao Pu’s success is deeply tied to China’s cultural confidence, and the brand has ridden a favorable wave. He added:
He also pointed out that Richemont Group prefers to focus on core values in the long term and maintain long-term loyalty relationships with consumers in local markets. The recent price increases by Cartier and Van Cleef & Arpels in May were not in response to short-term market changes. Compared to other industries like automobiles, in the current rapidly changing global market, factors including gold price fluctuations are unpredictable even for the group itself, but the resilience of the luxury industry is why he loves this sector.
The danger for Cartier in China may not be temporary.