Are you watching the jewels of the Richemont portfolio? Puns aside, Compagnie Financiere Richemont SA is the Swiss conglomerate home to many luxury companies including the sparkling Van Cleef & Arpels (VCA), Cartier, and Buccelatti. High-end timepiece brands Piaget, Baume & Mercier, Jaeger-LeCoultre, and Vacheron Constantin also fall under the Richemont umbrella, as well as fashion labels and purveyors like Chloe, Alaia, Delvaux, Peter Millar, and the Net-a-Porter/Yoox companies.
Image courtesy: @remy8remy8remy
For many in the PurseBop community VCA jewelry seems to go hand-in-hand with handbag collections. It’s not uncommon to see an Alhambra-adorned wrist holding a Hermès Birkin or a Frivole jewelry suite near a Kelly. Combined perhaps with a Cartier watch.
Image courtesy: @freyakillin
Hermès recently reported successful financial results for the the first half of 2023 (Read Hermès Revenues Rise 22% in First Half of 2023 With No Decline in the United States). This is on top of its favorable numbers for 2022 and first quarter of 2023 (Read more: Can the Uber Rich Be Enough for Hermès and Chanel to Stay on Top?).
While luxury brands like Chanel and LVMH also did well in 2022 and early 2023, unlike Hermès, both noted a softening in the United States. Indeed, LVMH described a decline in the purchasing by the “aspirational” U.S. consumer. (Read LVMH Sales Continue to Rise in First Half of 2023).
So despite continued reports about the luxury market booming even as other segments slow or struggle, there are bumps along the way. LVMH and Chanel have claimed higher interest rates in the United States may be affecting demand. And China’s rebound, although strong, has been inconsistent. In fact, the biggest risk thus far for luxury brands seems to be around the aspirational consumer, or the rich but not super-rich spenders. No one seems to really know what is around the corner.
Image courtesy @thecapricorn_style
Nevertheless, with an apparent overlap of target customers, we wondered whether VCA and Cartier are experiencing the same positive growth as the top tier handbag purveyors. Similarities abound in the marketing of these exclusive and expensive luxury products. High demand and limited availability mean that rarely can one just walk in and pick up an intended purchase. And, the vast majority of sales are made in brand-owned and operated boutiques. It certainly all sounds very much like old-school Hermès, and the strategy to which Chanel and LVMH currently aspire.
Image courtesy: @fnch310
In a sense it could be a game of which would you rather – money in the bag, or jewels on the person. And apparently, folks want both, at least so far.
@blessvch
Recent financial reports demonstrate the particular strength of Richemont’s jewelry and watch businesses. For its financial year ending March 31, 2023, Richemont hit a record $21.7 billion in annual sales, representing a 19% year over year increase. Leading the success were Richemont’s jewelry business lines – VCA, Cartier, and Buccellati. Together they experienced a 34.9% increase in sales over the prior year. Richemont’s watchmakers also fared well, improving 19% over the prior year.
In its Q1 of the new year which ended June 30, Richemont saw sales surge 14% (19% at constant exchange rates). This was attributed largely to a rebound in spending by Chinese nationals, whether at home or abroad. Sales in Europe rose 11% over the comparable period of 2022 due to spending by locals and by tourists from the Americas, Middle East, and China.
On the other hand, revenues in the Americas declined 2% based on lower wholesale sales. U.S. retail sales were flat against the prior year. Like LVMH, Richemont points to the reluctance of the aspirational customer to spend.
Image courtesy: @luxstina
Geographically, Richemont points to the rebound in China as a reason for the improving financials. Specifically, sales grew as health and travel restrictions eased. Also strong were sales in Japan and Europe, followed closely by the Americas.
However, Richemont chairman Johann Rupert acknowledged a slowdown in the United States, which he tied to the rapid rise in interest rates. Beyond the United States,
“Economic volatility and political uncertainty look set to remain features of the trading environment. The Group will therefore seek to maintain the necessary agility to manage fluctuating levels of demand. I am confident that our Maisons are well positioned to meet strong demand, notably driven by a significant resumption of Chinese travel.”
@blessvch
Image courtesy: @siradong
As for the Swiss-born rumors of LVMH buying Cartier, Richemont chairman Johann Rupert says Cartier is not for sale. Keep in mind that Rupert is the patriarch of the Rupert family that founded Richemont, and, according to reports, has long been reluctant to give up control of the company.
Image courtesy: @tamara
So, if you had to choose between growing your handbag or jewelry collection, which would it be? Don’t say both… because, well, of course ;)
Read related articles:
Can the Uber Rich Be Enough for Hermès and Chanel to Stay on Top?
Chanel Has Not Ruled Out Increasing Prices Again This Year
Hermès Financials Soared in 2022: Employees to Receive €4,000 Bonus
LVMH Revenues Soar 17% in Q1 of 2023 Due to Asia and Fashion & Leather Goods
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PurseBop
XO
Updated: August 4th, 2023
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