Investing.com -- Luxury goods giant Richemont (SIX:CFR), the owner of Cartier and other high-end brands, reported a 10% increase in sales during its fiscal third quarter, beating market expectations.
This was driven by strong demand in jewellery and improving conditions in the watch segment, despite continued softness in China.
Analysts at Jefferies noted that the results provided a much-needed positive catalyst for the company’s shares, which were trading at around 24 times estimated 2025 earnings before the announcement.
Richemont's quarterly revenue reached €6.15 billion, outpacing analysts’ consensus estimates of €5.63 billion.
Jewellery sales surged 14%, well above the expected 4% growth, while watch sales declined by 8%, an improvement from the 14% drop anticipated by analysts.
Regionally, the United States emerged as a standout performer, with sales soaring 22% year-over-year, compared to a 12% increase in the previous quarter.
The sharp growth in the U.S. came as local demand rebounded following the elections. Europe also delivered strong results, with a 19% sales increase, up from 6% in the prior quarter, as tourism and local spending picked up.
The Asia-Pacific region, excluding Japan, continued to face headwinds, with sales down 7%. While this marked an improvement from the 18% decline in the previous quarter, demand in mainland China remained weak, falling 18%.
However, this was an improvement from the 27% drop reported in the first half of the fiscal year, partly due to easier comparisons.
By sales channel, Richemont’s retail and online divisions posted double-digit growth of 11% and 17%, respectively, reflecting the strength of its direct-to-consumer strategy.
Wholesale sales rose by 4%, a modest recovery compared to declines seen in the first half of the fiscal year.
Jefferies analysts flagged the likelihood of upward revisions to consensus estimates for Richemont’s fourth-quarter and full-year earnings following the strong results.
Current forecasts project a 3% sales increase for the group in the fourth quarter, with jewellery and watch sales expected to rise by 6% and decline by 9%, respectively.
The company’s operating margins also appear poised for improvement, with analysts expecting better-than-anticipated gross margin resilience despite challenges in the watch segment.
“However, its Specialist Watchmaking division is under pressure, given a more challenged watch cycle, which is diluting group growth and profitability,” said analysts at RBC Capital Markets in a note.