Richemont sales growth tops expectations despite quarter-on-quarter slowdown

Investing.com -- Richemont (SIX:CFR) reported a slowdown in sales growth in its fourth quarter as the luxury house known for its Cartier brand was hit by sluggish demand in its key Chinese market.

But Switzerland-listed shares in the company still rose in early trading on Friday, with analysts noting that the 2% uptick in net sales in constant currencies to 4.80 billion euros in the three months ended on March 31 was better than expected. According to Visible Alpha data cited by Morgan Stanley, consensus projections had seen net sales edging up by 0.6% to 4.79 billion euros.

However, the quarterly increase was slower than the 8% rise Richemont posted in the prior three months ended in December.

For the entire 2024 fiscal year, sales jumped by 8% to 20.61 billion euros, marginally below Visible Alpha projections of 8.1%. Reported pre-tax earnings of 4.79 billion euros also missed expectations of 4.81 billion euros.

Like other luxury groups, Richemont has been hampered by weak demand in China and strong comparison numbers in the prior year, when sales surged in the country following the lifting of COVID-19 era restrictions.

In a statement, Chairman Johann Rupert said that the "challenging comparatives" persisted into the fourth quarter, but added that this was offset by resilience in other regions.

"As we predicted, a sustainable rebound in Chinese demand would take some time," Rupert said.

Globally, demand has been dented by elevated living costs, which have persuaded many shoppers to forego spending on expensive nonessential items. Rupert said it is continuing to operate in an environment of "macroeconomic and geopolitical uncertainty."

Yet analysts said that the latest results from the firm behind Swiss watch labels Piaget and Jaeger-LeCoultre were "largely in line with market expectations," adding that they "do not expect consensus to move much."

In a separate announcement, Richemont said that Van Cleef&Arpels Chief Executive Nicolas Bos has been promoted to CEO of the wider group. Current boss Jerome Lambert, who has helmed Richemont since 2018, will become Chief Operating Officer, the company added.

The Morgan Stanley analysts said the shake-up was "somewhat unexpected," but noted that Bos is "highly regarded."