Cartier-owner Richemont's jewellery sales offset Middle East gloom
Richemont's Financial Performance and Market Trends
By John Revill
Strong Jewellery Sales Drive Revenue Growth
ZURICH, May 22 (Reuters) - Cartier-owner Richemont reported better-than-expected revenue for the first three months of the year on Friday, as a drop in Middle East sales was more than offset by strong demand from the United States and Asia.
The company's sales outpaced rivals Hermes, LVMH and Kering during the quarter, helped by continued strong demand for jewellery, a segment to which it is more exposed.
Jewellery Segment Outperforms Watches
Swiss-based Richemont, which makes brooches, earrings and necklaces under the Cartier, Buccellati, Van Cleef & Arpels and Vhernier brands, saw its jewellery sales rise by 14% during the quarter.
In contrast, its watch business - which includes the IWC, Jaeger-LeCoultre and Piaget brands - grew only 1%.
Luxury Sector Trends and Consumer Behavior
Jewellery has been a fast-growing segment of the luxury sector in recent years as high-income households have continued buying gifts and are getting richer thanks to rising equity markets, higher asset values and rising executive incomes, analysts say.
How much some people earned in some sectors like tech in the U.S. was "surreal," said Richemont Chairman Johann Rupert.
"High-end luxury consumers are holding up far better than other luxury buyers and the fashion and accessories end of the luxury market," said Kepler Cheuvreux analyst Jon Cox.
Regional Performance and Market Insights
U.S. and Asia Lead Growth
Rupert said the U.S. economy continued to do well, while China was stable and high growth in Hong Kong was returning.
"The U.S. economy, the metrics are still looking better than many other economies, and the feel-good factors are still there," he told reporters.
Cartier was doing "very well" with new collections in China, where jewellery was also outpacing watches, Rupert said.
Middle East Sales Decline Amid Regional Tensions
Overall during the quarter, strong sales growth in Asia, Japan and the Americas helped Richemont compensate for a 3% sales decline in the Middle East region as tourists stayed away due to the Iran war.
Financial Results and Analyst Expectations
Revenue and Profit Figures
Sales grew by 13% in constant currencies to €5.40 billion ($6.27 billion) during the first quarter, beating analyst forecasts for €5.30 billion in a consensus of analysts gathered by Visible Alpha.
The company, which does not report quarterly profit, said its full-year net profit improved to €3.48 billion from €2.75 billion a year earlier.
Margins and Share Performance
But the figure was below the €3.69 billion forecast, while the operating profit margin fell 90 basis points to 20.0%, reflecting high raw material prices, including gold.
Shares in the company were 1.8% lower at 1100 GMT.
($1 = 0.8610 euros)
(Reporting by John Revill, editing by Tassilo Hummel and Elaine Hardcastle)