Richemont sees sales surge in second quarter driven by jewelry and strong geographic performance

Luxury conglomerate Richemont has generally demonstrated robust performance in recent periods, with its annual results earlier this spring and Q1 figures in July indicating steady progress. However, not all segments have shared equally in this success; Q1 saw a notable 1% dip in fashion brand sales. The latest set of results, covering the second quarter (Q2) and the first half (H1) of the fiscal year, reveal a generally solid picture with accelerating momentum.

Richemont reported "solid" results for the first half, highlighting "strong sales momentum" specifically in Q2, the three months ending September. Group sales for H1 reached €10.6 billion, marking a 10% increase at constant exchange rates (CER) and 5% at actual rates. A significant acceleration was observed in Q2, with sales climbing 14% at CER. Operating profit also saw healthy growth, increasing by 7% at actual rates and 24% at CER, reaching €2.358 billion and resulting in a 22.2% operating margin. This strong performance was attributed to a substantial sales contribution and rigorous cost discipline, which helped mitigate the impact of macroeconomic headwinds on the gross margin, though the latter still saw a 1% dip. Profit from continuing operations rose 1% to €1.796 billion, while reported profit surged to €1.813 billion from €457 million a year ago, primarily due to continuing operations and the non-recurrence of a prior-year loss from discontinued operations following the sale of YNAP to LuxExperience.

Among its diverse categories, Richemont's Jewellery Maisons, including powerhouses like Cartier and Van Cleef & Arpels, continued to exhibit remarkable strength throughout H1. Sustained high demand fueled a 9% actual growth and a 14% CER increase in jewellery sales, contributing significantly to a healthy 32.8% operating margin for the segment.

Conversely, the Specialist Watchmakers division continued to experience declines over the period, albeit at a slower pace. Sales were down 6% at actual rates and 2% at CER, reflecting the persistent challenging environment for luxury watches. However, there are signs of improvement after a demanding 18 months, with Q2 delivering a welcome uplift of 3% growth at CER, indicating a potential turnaround.

The ‘Other’ business line, which encompasses Richemont's fashion and accessories brands, presented a more nuanced picture. Following a 1% dip in Q1, sales for the half were described as "broadly stable," which translated to a continuing 1% decline at actual rates for the six months. However, at CER, sales in this division rose 2% in H1 and accelerated to 6% in Q2. Despite improving sales performance, the division recorded an operating loss of €42 million, with €33 million specifically attributed to the Fashion & Accessories Maisons. These Maisons were supported by double-digit growth in ready-to-wear at constant rates, with improved sales momentum primarily driven by the continued strength of Alaïa and Peter Millar, alongside an improving trajectory for Chloé.

Geographically, Richemont’s performance was robust across the board in the first half. All regions achieved double-digit growth in Q2 at constant rates, driven by "sustained local demand." Europe, the Americas, and the Middle East demonstrated strong H1 double-digit sales growth at both actual and constant exchange rates. Notably, Q2 saw a return to growth for the combined markets of China, Hong Kong, and Macau, as well as Japan, while other regions successfully maintained their solid sales momentum.

Finally, growth was consistent across all distribution channels during the first half. Direct-to-client sales continued to be a dominant force, representing 76% of the group's total sales, maintaining alignment with the prior-year period's contribution.