Richemont thrives despite China slump

What happened Yesterday, Richemont reported its December quarterly results, marking a record-breaking finish to 2024. The Swiss luxury goods conglomerate — owner of brands such as Chloé, Dunhill, Cartier, Vacheron Constantin, Jaeger-LeCoultre, Van Cleef & Arpels, Piaget and more — posted its highest-ever quarterly sales of €6.2 billion (46.8 billion RMB), marking a 10% year-over-year (YoY) surge at constant and actual exchange rates. Notably, demand in mainland China remained subdued, with an 18% decline in sales. Richemont’s other key markets, however, flourished. Europe led the charge with a 19% uptick, buoyed by both domestic and tourist spending, while the Americas (+22%), Japan (+19%), and the Middle East & Africa (+20%) followed suit, highlighting the brand’s global appeal. The crown jewels of Richemont’s portfolio — its Jewellery Maisons, including Cartier, Van Cleef & Arpels, and Buccellati — sparkled brightest, achieving 14% growth. Holiday season novelties and timeless designs continued to captivate consumers, with retail channels accounting for 71% of total sales. As Richemont looks to the future, its €7.9 billion (59.5 billion RMB) net cash position underscores confidence in navigating uneven global demand and fortifying long-term growth, even amid challenges in China. The Jing Take In addition to Richemont’s earnings report on Thursday, data from the China National Bureau of Statistics was also released at a press conference on Friday morning, reporting China’s 5% GDP growth in 2024. While the reported growth meets official government targets, it reflects an overall subdued economic year that has impacted not only Richemont brands but the broader market as well. GDP growth fell short of the 5.2% rise in 2023, and the population also continued to fall for the third year in a row. That being said, China’s property market is stabilizing, with new home prices in first-tier cities rising 0.2% — their first increase since June 2023. Urban unemployment fell to 5.1%, down 0.1% year-on-year, while youth unemployment dropped for the fourth consecutive month, decreasing 0.4% in December, reflecting gradual economic recovery. A stronger-than-expected Q4 rebound (5.4% YoY) suggests that government stimulus is taking effect, yet persistent structural challenges — including weak consumer demand, a property crisis, and mounting debt — continue to temper optimism. These dynamics had a direct impact on Richemont, with the mainland China market experiencing an 18% sales drop in Q3 FY2024. For luxury players like Richemont, the disconnect between China’s economic growth and consumer confidence is palpable. The luxury industry’s reliance on high-value shoppers underscores how restrained discretionary spending poses risks. However, Richemont’s broader global performance demonstrates resilience, as well as a suggested weakening of China’s influence on the performance of global luxury. Double-digit growth in Europe, the Americas, and Japan offset Richemont’s challenges in China, after all. Looking ahead, continued government stimulus could revive demand, particularly if the property sector stabilizes. Yet, global headwinds, including potential trade tensions, may challenge recovery. For Richemont, a targeted strategy in China that focuses on localization, online channels, and high-touch retail experiences will be essential to navigating the market’s complexity and evolution. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Richemont thrives despite China slump

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Published January 17, 2025

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Richemont thrives despite China slump