Luxury goods group Richemont’s shares saw a significant increase of up to 21% in early trading after the company reported strong growth and earnings, particularly in its jewellery business. The sales and operating profit for the six months ending in September rose by 25%, with jewellery sales increasing by 24%. The positive reception from the market was further boosted by China’s relaxation of some COVID restrictions, which could benefit luxury companies like Richemont. Analysts were impressed by the unexpected figures, attributing them to an improved business environment in Asia and the high quality of Richemont’s brands, especially its jewellery business.
Despite reporting a net loss for shareholders due to a non-cash charge related to its investment in YOOX Net-A-Porter (YNAP), Richemont’s profit from continuing operations increased by 40% to 2.1 billion euros. Group sales also saw a substantial increase of 24% to 9.67 billion euros, driven by growth in the Asia Pacific region and returning customers in other regions. Executives remain cautious about the future, citing ongoing volatility and unpredictable circumstances, including flareups in different cities disrupting business operations. As a result, Richemont plans to scale back its marketing and events to align with the more subdued economic environment in Europe and North America.
Chairman Johann Rupert highlighted potential risks such as rising interest rates and cost of living pressures, while CEO Cyrille Vigneron expressed uncertainty about the future economic outlook in various regions. Despite the cautious approach, analysts praised Richemont’s latest results, noting the excellent sales growth, profitability, and cash flow. The company’s prudent guidance aligns with its reputation for cautiousness, with Vontobel analyst Jean-Philippe Bertschy indicating that Richemont’s performance in the current challenging environment exceeded expectations. Overall, Richemont’s strong performance and continued focus on quality brands position the company well for future growth and success in the luxury goods market.
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