Cartier owner beats holiday quarter sales forecast. Why did the stock fall?

Swiss holding company Richemont, which owns the Cartier brand, achieved record revenues in the key New Year's quarter for luxury manufacturers, which significantly exceeded market expectations. Richemont's second consecutive quarter of double-digit sales growth gives cause for optimism to investors, who expect the sector to rebound in 2026. At the same time, the mood in the industry is dampened by geopolitical shocks and the collapse of US retailer Saks.

Richemont on January 15 reported an 11% increase in sales in the third fiscal quarter - from October to December 2025 - excluding changes in exchange rates, to a record €6.4 billion. The average forecast of analysts suggested growth of 7.5%. Revenue of the jewelry division increased by 14%, also exceeding market expectations, Bloomberg writes. Growth was demonstrated by all divisions, including the watch segment, which previously lagged behind other areas of the group, the agency notes.

Richemont shares jumped 3% at the opening of trading in Zurich, triggering a rise in quotations across the luxury sector, but then quickly fell into the red zone. Now the securities of the world's second-largest luxury goods maker by sales volume are trading 1.5% below the closing price on January 14. The ongoing geopolitical turmoil and the bankruptcy of US luxury retailer Saks Global this week are undermining the positive sentiment in the sector, says the Financial Times (FT).

Richemont noted the continued improvement in one of the largest luxury markets - in the People's Republic of China - where the company's revenue grew by 2%. This country accounts for about 20% of the company's sales - the second place after the United States, Reuters reported, citing Bank Vontobel estimates. Back in the first half of 2024 China was the main driver of the sector, but then demand weakened: due to economic problems in the country, the middle class began to refuse optional spending, and wealthy people had to demonstrate modesty in spending, the FT points out.

The positive trends in China reported by Richemont "could be seen as a turning point," Reuters quoted RBC analyst Piral Dadhania as saying. The company's results are a good signal for the entire luxury sector, he added.

Demand in China, where most European fashion houses have seen sales plummet in 2024, is seen as crucial to the luxury industry's return to sustainable growth. "The Chinese consumer holds the keys to the luxury market and is thus a major theme in the sector for 2026," argues Berenberg analyst Nick Anderson.

According to Vontobel analyst Jean-Philippe Bertschi, Richemont's growth in the watch segment and in China "signals that the bottom has been passed." "Margin and free cash flow remain under pressure, but the brand portfolio, pricing power and strong balance sheet set the company apart," Bertschi said.

Italian cashmere manufacturer Brunello Cucinelli became the first luxury brand to report quarterly sales this week. Analysts found its reporting encouraging, praising the relatively calm nature of the release amid recent volatility in the sector, Bloomberg reports. LVMH will report its results later this month, while Hermes and Gucci owner Kering will report in February.

After two turbulent years, the market expects the luxury industry to maintain its "recovery" momentum in the third quarter and into the fourth quarter, despite the effect of a high comparison base, writes Vogue. Analysts on average forecast moderate growth, comparable to the dynamics of the third quarter, which contributes to the stability of the U.S. stock market, signs of stabilization in China and the first positive results of the strategic restructuring of companies in the luxury segment, the publication notes.

This article was AI-translated and verified by a human editor