Luxury Sector Sees Resurgence as Richemont Reports Record Sales
The luxury goods industry is showing signs of recovery, with Cartier owner Richemont reporting a 10% increase in fiscal third-quarter sales. This marks a significant turnaround for the company, which had previously reported a 1% year-on-year dip in sales.
Strong Performance Across Regions
Richemont’s sales rose to 6.2 billion euros ($6.38 billion) at constant exchange rates in the three months to the end of December, exceeding analysts’ expectations. The company saw double-digit growth across all regions except Asia Pacific, where sales fell 7%. This decline was largely driven by an 18% drop in sales in mainland China, Hong Kong, and Macau.
China’s Impact on Luxury Demand
China, once a key driver of luxury demand, has been struggling to recover from a post-Covid-19 pandemic macro-economic slump. However, Richemont’s results suggest that the company is weathering the storm, with strong domestic demand and tourist inflows driving growth in Europe and other regions.
Positive Signal for the Industry
Luca Solca, senior analyst for global luxury goods at Bernstein, believes that Richemont’s results provide a positive early signal for the return to health of the wider luxury sector. “Europe and the Asia-Pacific region, excluding greater China, have both seen strong sequentially improvements, driven by higher domestic demand and strong tourist inflows, while Americas continue to be driven by strong local demand,” Solca noted.
A Return to Growth
Richemont’s results mark a return to growth for the company, which had previously reported record full-year sales in May. The high-end group’s strong performance is a promising sign for the luxury sector as a whole, suggesting that the industry may be poised for a comeback.
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