Richemont Surges as Luxury Demand Keeps Going Strong
11 November 2022 - 8:15PM
Dow Jones News
By Joshua Kirby
Shares in Compagnie Financiere Richemont SA traded sharply
higher Friday after the Swiss luxury-goods group struck a bullish
tone despite macroeconomic uncertainty, as tourism in Europe and
recovery in China aided consensus-beating first-half earnings.
At 0830 GMT, shares traded 13% higher at CHF121.05.
Richemont booked a 16% organic rise in sales in the first half
to 9.68 billion euros ($9.88 billion), with growth accelerating in
the second quarter thanks in part to an easing of strict pandemic
restrictions in China, where growth in the latter three months was
flat. In Europe, revenue was driven both by local clientele and
tourists lured by the strong U.S. dollar.
Richemont's core jewelry business, home to the Cartier and Van
Cleef & Arpels brands, boosted group performance with a 16%
rise in sales and a robust operating margin of 37.1%, contributing
to above-expectations operating earnings of EUR2.72 billion, the
company said.
The jewelers' performance puts them among luxury's star players,
analysts at Bernstein said in a note following the update.
Second-quarter growth at the division was around the same levels as
booked by sector-leading brands at Louis Vuitton, Dior--owned by
French group LVMH Moet Hennessy Louis Vuitton SE--and Hermes
International SCA, the analysts said.
"This points to mega-brands at the top of their categories
continuing to extend their lead against competitors," they
said.
Richemont meanwhile expects further demand for its products,
despite macro uncertainty, group Chief Executive Jerome Lambert
told journalists in a call to discuss the update. In Europe, the
group is seeing no slowdown in demand, which continues to benefit
from a postpandemic boom, Mr. Lambert said.
In China, however, the demand situation remains unclear given
limited visibility on the government's zero-Covid-19 policy,
finance chief Burkhart Grund said.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
November 11, 2022 04:00 ET (09:00 GMT)
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