Swiss luxury group Richemont enjoyed a bump in sales during the quarter that included the key Christmas shopping season, as strong growth at its jewellery brands in Asia and the Middle East offset weakness in Europe.
The company behind jewellers Cartier and Van Cleef & Arpels reported a 5 per cent rise on a constant currency basis to reach revenues of SFr4.2bn ($4.7bn) in its third quarter to the end of December. That was ahead of analysts’ expectations for flat sales.
Richemont’s performance provides further evidence that even as the Covid-19 pandemic rages, people with means are still treating themselves to luxury goods as other types of spending, such as travel or restaurants, remain off limits.
But the biggest luxury companies are faring better than smaller ones in the crisis given the tight control they keep over distribution and their deeper pockets to invest in ecommerce. They have cut costs quickly, held virtual fashion shows, and catered to their best clients by selling over video and text chats.
Smaller players such as Tod’s and Salvatore Ferragamo in Italy have struggled to keep up. UK-based Burberry on Wednesday reported a worse than expected 9 per cent decline in same-store sales during the third quarter.
Richemont shares rose as much as 3 per cent in morning trading before paring back gains, pushing up other luxury stocks such as LVMH by 2.7 per cent and Kering 2 per cent.
“We take the Richemont update as another clear data point that leading players in the luxury goods sector continue a strong progression in the second half, despite the second wave Covid-19 lockdowns in Europe,” wrote Bernstein analyst Luca Solca in a note.
“We expect these results should support the sector, which was recently on the back foot because of higher Covid-19 cases in China.”
The halt of international travel last year meant that the Chinese who have driven nearly all of the sector’s growth in recent years turned to buying at home instead of on shopping trips to Europe’s fashion capitals. Richemont’s sales in China rose 80 per cent in the most recent quarter, while in Europe they were down 20 per cent and in the Americas were largely flat.
Richemont did not give any guidance for the coming quarter, but its chairman and largest shareholder Johann Rupert warned last year that the Covid-19 will cause “grave economic consequences” for the sector for up to three years.
LVMH is due to report full-year earnings on January 26 and Kering on February 17.