Against the backdrop of a sluggish luxury market, Swiss luxury group Richemont successfully improved its overall performance thanks to strong growth in its jewelry division. Despite slowing demand in Japan and declining performance in its watch division, the outstanding performance of the jewelry business was a key driver of the group’s growth.
Strong Growth in Jewelry Business
Richemont Group’s jewelry brands, such as Cartier and Van Cleef & Arpels, have always been the group’s star performers. In the first quarter of the fiscal year ending June 30, group sales increased by 6% at constant exchange rates to €5.4 billion, accelerating from 4% growth in the previous quarter. Jewelry brand sales grew by 11%, exceeding market expectations for 9% organic growth. Deutsche Bank analysts noted that the continued growth of jewelry brands and categories made it the strongest performing luxury goods sector this quarter.
Challenges in Watches and Fashion
Despite a strong performance in jewelry, Richemont’s watchmaking division saw sales decline by 7%, while the group’s “Other” business area (which includes fashion and accessories brands) also saw a 1% decline. Nevertheless, the company highlighted “solid momentum” at Alaïa and “encouraging” performance at Chloé.
Regional Divergence
Regional sales increased by 17% and 11% in the Americas and Europe, respectively, demonstrating continued strong demand in these regions. However, sales in Japan declined by 15%, primarily due to the strong yen, which significantly weakened tourist spending, particularly from Chinese tourists. Despite this, local demand remained positive. Sales in the Asia-Pacific region were flat, with a combined 7% decline in China, Hong Kong, and Macau, but this decline was more than offset by strong growth in nearly all other Asian markets.
Luxury Market Outlook
With other luxury giants like LVMH, Kering, Hermès, and Prada about to release their quarterly earnings reports, analysts expect the market to continue facing challenges due to factors such as a weak Chinese market, a weakening US dollar, and tariff threats. However, the market will also continue to show significant differentiation, with some brands performing strongly while others may struggle.
Against this market environment, Richemont’s earnings report marks a strong start to this quarter’s earnings season. Bernstein analyst Luca Solca stated, “Given the context of the second quarter of calendar 2025, we view this as a strong set of results that should support stock performance.”
Richemont Group’s success in its jewelry business not only demonstrates its strong competitiveness in the luxury market but also provides valuable insights for other brands facing market challenges. In the future, continuous innovation and adaptability will be key to luxury brands remaining competitive.
