Sales at Cartier's parent company were twice as strong as expected. This bolstered the luxury market

Sales at the Swiss luxury group Richemont nearly doubled market expectations last quarter, driven by strong demand for Cartier rings and bracelets from affluent Americans. The company’s stock hit a new all-time high following the release of its earnings report. This positive momentum also spread to other manufacturers of premium goods.

Richemont's revenue rose 20% on a constant-currency basis in the first quarter ended June 30. It reached €6.33 billion—nearly double the Bloomberg consensus estimate.

The jewelry division, which includes brands such as Cartier and Van Cleef & Arpels and accounts for approximately three-quarters of the company’s revenue, posted quarterly growth of 24%. The main drivers were the North and South American markets. Richemont noted that Americans are more inclined to spend significant amounts on jewelry than Europeans. By way of comparison, the group’s total sales in the Americas increased by 27% year-over-year, while in Europe they rose by 11%.

Revenue from watch brands rose by 8%. Vacheron Constantin, Jaeger-LeCoultre, and A. Lange & Söhne posted the most notable results.

Total sales increased across all geographic markets, including a return to growth in the Middle East and Africa region, which accounts for just under 10% of Richemont’s revenue. The conflict between Iran and the U.S. disrupted tourist flows and negatively impacted sales at duty-free shopping destinations such as Dubai.

During periods of economic uncertainty, premium jewelry is considered a more reliable way to preserve capital than expensive clothing or leather goods, according to Bloomberg.

Richemont’s strong earnings report is further evidence that the company has weathered the general slowdown in the luxury sector—including the decline in demand in China—better than its competitors, such as LVMH, which owns Gucci, Kering, and Hermès, the agency writes.

Richemont shares surged 7.4% in Zurich, reaching a record high. According to Bloomberg, this marked the company’s largest intraday gain since early May.

The rally also provided a boost to other companies in the luxury sector. LVMH shares rose 3% in Paris trading, and Hermès shares rose 3.6%, though both stocks later gave up some of their gains. Kering shares rose 4.2%.

Richemont’s strong results can be attributed to “many years of consistent strategy execution, disciplined price increases, effective capital allocation, and a portfolio of highly sought-after brands with strong pricing power and geographic diversification,” Jean-Philippe Bertschi, an analyst at the financial holding company Vontobel, told Bloomberg.

He emphasized that sales growth is accelerating, even though it is already at a high level, and this is happening against the backdrop of a challenging macroeconomic environment in which competitors are expected to post weaker results.

Richemont is successfully capitalizing on growing demand at both ends of the luxury market: both from ultra-high-net-worth clients who prefer elite jewelry and from buyers looking for products that offer the best value for money, according to Bernstein analyst Luca Solca, as quoted by Reuters.

“When spending $3,000–$4,000, a middle-class consumer is more likely to choose a piece of jewelry than, say, a handbag, since a ring, bracelet, or necklace can be worn every day and are perceived as more durable items,”, he said.

Kepler Cheuvreux analyst John Cox agrees, calling Richemont the market leader in luxury jewelry and classic watches. “Luxury buyers want products with intrinsic value, and their demand is supported by wealth creation through AI,” he added.

Overall, analysts are positive about Richemont shares—17 out of 26 analysts covering the company recommend buying them. There are no sell recommendations.

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