China's appetite for Cartier boosts Richemont sales

[ZURICH] Chinese splashing out on Cartier, Richemont's flagship jewellery brand, helped the world's second-biggest luxury group post a 5 per cent 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, jewellery, where Richemont's Cartier brand is seen as the global leader, has fared much better.

Much of the world's jewellery is unbranded, giving popular labels like Cartier, and LVMH's Bulgari and recently acquired Tiffany, stellar growth prospects.

RBC analysts said the luxury jewellery category was amongst the most attractive within the sector with long-term historical growth rates of 7-8 per cent, while Citi analyst Thomas Chauvet said Richemont had outperformed most jewellery peers in the quarter.

The same isn't true for watches that have also been penalised 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.

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Richemont's jewellery brands Cartier and Van Cleef & Arpels delivered 14 per cent constant currency sales growth in the quarter to Dec 31, while its watch labels saw sales fall 4 per cent, 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 80 per cent. The Middle East benefited from resumed tourist spending.

Europe declined 20 per cent, hit by the absence of tourism and store closures, and the Americas stagnated.

REUTERS