Luxury stocks boom as Richemont kicks off reporting season with a bang
Luxury stocks across the world have been given a boost by Cartier-owner Richemont’s booming sales figures this morning.
Richemont’s report, the first set of luxury results covering the festive season, indicated that the luxury market may finally be recovering from a slowdown that has lasted nearly two years.
Revenue from jewellery, Richemont’s biggest division, rose 10 per cent to €6.2bn (£5.23bn), well ahead of market expectations of a one per cent increase.
The results were driven by double-digit growth in Europe and the Americas, two regions which brands and analysts have been banking on to deliver growth after a slowdown in luxury’s traditional stalwart base of China, as sales in mainland China fell 18 per cent in December.
The slowdown in China plus weaker demand from aspirational customers in Europe encouraged a divergence between luxury brands last year, with only the strongest brands – such as Hermes – reporting strong sales.
In response to Richemont’s results, luxury shares across the world have boomed.
Shares in industry behemoth LVMH rose 7.8 per cent, while shares in Burberry, Hermes and Kering rose 8.4 per cent, 5.2 per cent and 7.8 per cent, respectively.
“Richemont… kickstarted the reporting season for luxury companies this morning on an exceptionally high note,” Mamta Valechha, consumer discretionary analyst at Quilter Cheviot said.
RBC analyst Piral Dadhania agreed that the results were “exceptionally strong” and predicted the sales would “read-across positively to the wider luxury sector”. However, Valechla noted that it was “hard to tell whether this performance reflects Richemont accelerating their share gains in the branded jewellery market, or if it is a reflection of demand in the broader luxury goods market, or both.”
“There will be questions on investors’ minds about whether we have reached the trough, but for today, expect positive share price reactions across the sector,” Valechla added.
Time will tell, with many more luxury brands set to report in the next few weeks and industry bellwether LVMH slated to release results at the end of the month.