Shoppers pass by the luxury Cartier store run by Cie. Financiere Richemont SA at the luxury department store Galeries Lafayette SA in Paris, France.
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Owner of Cartier Richemont on Thursday reported a 10% increase in sales in the fiscal third quarter even as demand in China surged, a positive sign for the health of Europe's luxury goods sector during the holiday shopping season.
Sales rose to 6.2 billion euros ($6.38 billion) at constant exchange rates in the three months to the end of December, in what the Swiss luxury brand described as its “highest ever” quarterly sales result. According to Reuters, this was an increase well above the 1% expected by analysts in the consensus cited by RBC.
The company posted double-digit growth in all regions except Asia-Pacific, where sales declined 7%, led by an 18% decline in the combined regions of mainland China, Hong Kong and Macau.
China, once a key driver of demand for luxury goods, now poses a major obstacle to the sector as it struggles to recover from the macroeconomic slump following the Covid-19 pandemic.
The Swiss company's share price has fluctuated over the past year amid a turnover in top management and greater volatility in the luxury goods market.
Shares rose after the May nomination new CEO Nicolas Bosformer head of the group's jewelry brand Van Cleef & Arpels. The company's shares are currently up 28.75% compared to the previous year.
Richemont provides rdr.
The results mark a return to growth for the company, which was down 1% year-on-year sales in the first half of the year until September, citing the difficult macroeconomic situation and tougher conditions in China. Sales for this six-month period amounted to EUR 10.1 billion.
Until then, this high-end group had been an outlier in the context of the broader downturn in the luxury sector, which was a record year-round sale in May.
Luca Solca, senior analyst for global luxury goods at Bernstein, said Thursday's results provided an early, positive sign of recovery in the broader luxury sector.
Europe and the Asia-Pacific region, excluding greater China, “saw significant improvement driven by higher domestic demand and strong tourist inflows, while the Americas continued to see strong local demand,” Solca said in the note.
“We perceive this as an encouraging signal and confirmation – in line with market expectations in recent weeks – that the third quarter of this year could have been a low,” he added, referring to the third calendar quarter through September.