CFRUY Compagnie Financiere Richemont (PK)

   By Joshua Kirby 
 

Shares in Compagnie Financiere Richemont gained ground Friday after the Swiss luxury-goods major said it was confident of further cashing in on a recovery in Chinese demand, having already begun to see the benefits in the last months of its fiscal year.

AT 0742 GMT, shares traded 5.3% higher at CHF157.35, cementing their top performance among European luxury stocks this year.

Richemont booked sales of 19.95 billion euros ($21.78 billion) for its fiscal year to March 31, 14% higher than the year before at constant currency and surpassing analysts' forecasts, according to a FactSet-compiled poll ahead of the update. In Asia-Pacific, sales returned to growth for the full year after China ended strict sanitary restrictions in December, Richemont said.

Operating profit also beat expectations, coming in above EUR5 billion for the year, with a margin of 25.2%. The core jewelry division, home to Cartier and Van Cleef & Arpels, led profitability with a margin just shy of 35%.

The group's brands--which also include a stable of watchmakers and fashion houses--are set to further benefit from China's postpandemic recovery, notably with the resumption of international tourism, Chairman Johann Rupert said.

The results should lead to consensus upgrades for fiscal 2024, thanks to a likely step-up in revenue growth amid the Chinese recovery, analyst Piral Dadhania at RBC Capital Markets wrote in a research note following the update.

Mr. Rupert nevertheless noted the political and economic uncertainty continuing to affect business around the world. Richemont will "seek to maintain the necessary agility to manage fluctuating levels of demand," he said.

But with U.S. resilience to consumption pressures still in doubt, Richemont's momentum looks attractive, Citi analysts said in a note following the print. "Richemont is still one of the best places to hide in luxury, we think," they said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

May 12, 2023 04:04 ET (08:04 GMT)

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