Important points
European luxury stocks soared on Thursday after Cartier’s parent company Richemont reported record quarterly sales, encouraging investors to say the sector is finally recovering from a slump caused by weak demand in China. My expectations were high.
The Swiss company said sales for the third quarter ended Dec. 31 rose 10% from a year earlier to 6.15 billion euros ($6.32 billion). Strong sales of the company’s jewelry brands (Bucciarati, Cartier, Van Cleef & Arpels, Vernier) offset the decline in watch sales.
Richemont said the company recorded double-digit growth in the Americas, Europe, the Middle East and Africa and Japan, with “a moderate decline in Asia-Pacific, although demand in China remains challenging.” Sales in mainland China, Hong Kong and Macau fell 18%.
China has been a major driver of luxury brand sales in recent years, but the economic downturn has squeezed domestic consumer spending.
Burberry and LVMH, luxury stocks jump on the news
Shares of British trench coat manufacturer Burberry. LVMH, maker of Louis Vuitton handbags and other luxury goods. Mr. Keling, owner of Gucci. Birkin and handbag maker Hermès also jumped on the news.
Richemont shares rose 15% in Swiss trading, while Burberry shares rose more than 5% in London. In Paris, LVMH, Kering and Hermès all rose at least about 5%.
