Richemont sales sizzle on China's Cartier zest

Chinese splashing out on Cartier, Richemont’s flagship jewelry brand, helped the world’s second-biggest luxury group post a 5 percent rise in sales in the final quarter of 2020.

While demand for luxury watches — about a third of Richemont’s sales — has contracted sharply during the COVID-19 pandemic, jewelry, where Richemont’s Cartier brand is seen as the global leader, has fared much better.

Much of the world’s jewelry is unbranded, giving top labels like Cartier, and LVMH’s Bulgari and recently acquired Tiffany, stellar growth prospects.

RBC analysts said the luxury jewelry category was amongst the most attractive within the sector with long-term historical growth rates of 7-8 percent.

The same isn’t true for watches that have also been penalized during COVID-19 lockdowns by their still high dependence on multibrand retailers and low e-commerce penetration.

Even though Richemont’s expensive IWC and Jaeger-LeCoultre timepieces are less vulnerable to smartwatch competition than peer Swatch Group’s they face stiffer competition from watch category leaders Rolex, Patek Philippe and Audemars Piguet which are privately-owned.

Richemont’s jewelry brands Cartier and Van Cleef & Arpels delivered 14 percent constant currency sales growth in the quarter to December 31, while its watch labels saw sales fall 4 percent, less than feared, according to analysts.

The performance was particularly strong in China — whose economy bounced back strongly from the pandemic in the latter part of 2020 and where Cartier held a big exhibition in 2019 on Chinese history and Cartier heritage — with sales up nearly 80 percent.