Richemont stock soars while the jewelry business shines

  • Jewelry Business Sees Sales Up 24%
  • Income from continuing operations up 40%
  • Chairman cautious on cost of living, rising interest rates

ZURICH, Nov 11 (Reuters) – Shares in luxury goods group Richemont (CFR.S) rose as much as 21% in early trade on Friday after the Cartier owner posted strong growth and profits, helped by its jewelry business.

The maker of IWC and Piaget watches surprised on the upside by growing sales and operating income from continuing operations by a quarter in the six months ended September.

Jewelry sales rose 24% during the period, with customers buying collections like Cartier’s Clash and Trinity rings and necklaces.

China’s easing of some COVID restrictions, which could help luxury businesses hurt by rapid shutdowns in major cities like Shanghai, contributed to an upbeat market reception.

“A far better than expected set of numbers, reflecting a mix of the improving environment in Asia during the quarter,” said Jon Cox, analyst at Kepler Cheuvreux.

The numbers also showed the quality of the group’s brands, “particularly its premium jewelry business,” Cox added.

For the period, Richemont reported a net loss to shareholders of 760 million euros ($776.72 million) after incurring a 2.7 billion euro non-cash charge related to its partial exit from online fashion retailer YOOX Net- A-Porter (YNAP) had been acquired.

But from continuing operations, which eliminated the impact of YNAP’s writedown and losses, Richemont’s profit rose 40% to €2.1 billion.

Group sales rose 24% to 9.67 billion euros, helped by an improvement in Asia-Pacific and double-digit percentage sales growth elsewhere as previously blocked customers returned to luxury boutiques.

Richemont shares were up 12% on the day just before 1000 GMT.

While executives called a recent reduction in quarantine requirements a “step in the right direction,” they cautioned that the situation remains highly volatile and unpredictable as flare-ups in various cities continue to disrupt business.

Richemont, which also owns jeweler Van Cleef & Arpels, remained cautious about the future, adding that it will scale back some of its marketing activities and events to reflect the more subdued economic environment in Europe and North America.

“Next year is very difficult to predict,” Cyrille Vigneron, Cartier’s chief executive officer, told reporters.

“China should get better, but we don’t know when,” he said. “There are signs of a recession in the US, but it’s not unfolding now, so we don’t know.

“Will there be an impact on Europe? Probably, but we don’t know.”

Chairman Johann Rupert highlighted rising interest rates and pressure on the cost of living as potential risks, although analysts said the majority shareholder was known for its caution.

“Richemont is known for making cautious forecasts, which this time are on point given the ongoing difficult environment,” said Vontobel analyst Jean-Philippe Bertschy.

The latest results showed “excellent sales growth, earnings and cash flow results,” he added.

($1 = 0.9785 euros)

Reporting by John Revill, editing by Miranda Murray, Shri Navaratnam and Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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