- ‘Robust’ annual performance
- Strong demand for Cartier brand
- €8.3 billion in net cash
Richemont (CFR:SWX) demonstrated its resilience once again by reporting increases in both fourth-quarter and full-year sales despite difficult luxury market conditions and with performance supported by the enduring popularity of its Cartier brand.
Shares in the Swiss high-end watches-to-jewellery purveyor behind the Montblanc, Buccellati and Van Cleef & Arpels brands rose 6.4% to 165 Swiss francs on the news, pulling rivals Hermes (RMS:EPA), Burberry (BRBY) and Kering (KER:EPA) higher on the positive read-across.
JEWELLERY SALES JUMP
For the year ended 31 March 2025, sales improved 4% to €21.4 billion with the company enjoying double-digit sales growth across all regions save for Asia Pacific and performance boosted an 11% jump in fourth-quarter jewellery sales.
However, annual operating profit declined by 7% to €4.5 billion with watch brand sales down 13% amidst a global watch market slowdown led by demand weakness in China.
In the final quarter, Richemont’s sales grew 7% to almost €5.2 billion, slightly ahead of analysts’ expectations, although the pace of growth did moderate from 10% in the third quarter.
Strong demand for Richemont’s high-end jewellery in the US helped to offset a weaker performance in the watch division, where fourth quarter sales fell 11%.
NET CASH CUSHION
Chairman Johann Rupert described the year’s performance as ‘robust’ and also flagged the continued strength of Richemont’s balance sheet, flush with €8.3 billion in net cash which should help the company to navigate a changeable market backdrop.
‘In a persistently uncertain macroeconomic and geopolitical environment, we maintained our focus on nurturing the maisons’ current and future growth, investing in our distribution network, manufacturing assets and quality craftsmanship,’ explained Rupert.
SWIRLING HEADWINDS
Russ Mould, investment director at AJ Bell, observed that demand for high-end jewellery in the US looks robust, judging by Richemont’s latest update which ‘crept in ahead of analysts’ expectations. This still represented a slowdown from the growth seen in the previous quarter but in the current environment, and given the wider malaise in the luxury sector, high single-digit growth is nothing to be sniffed at all.’
Mould continued: ‘Weak Chinese demand for watches is a negative and means Richemont needs to see continued resilience in the US market. The business is increasingly reliant on its jewellery arm and will hope the strength of its brands in this area will sustain it.
‘However, Richemont continues to face several significant headwinds including the strength of the Swiss franc against the dollar, higher gold prices and the impact of tariffs.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
