ZURICH, Nov 11 (Reuters) – Shares in luxury goods group Richemont (CFR.S) surged 21 percent in early trade on Friday after owner Cartier, helped by its jewelry business, posted a strong profit. growth and profitability.
IWC and the maker of Piaget watches surprised the watch’s gains by reporting a quarter-on-quarter rise in sales and operating profit from continuing operations in the six-month period to the end of September.
Jewelry sales rose 24 percent during the period, with customers snapping up collections such as Cartier’s Clash and Trinity rings and necklaces.
China has eased some coronavirus restrictions, which could help luxury companies hurt by rapid closures in big cities such as Shanghai, adding to upbeat market acceptance.
“This set of numbers was much better than expected, and it’s the combined result of an improving environment in Asia this quarter,” said Jon Cox, an analyst at Kepler Cheuvreux.
Cox added that the figures also showed the quality of the group’s brands, “especially its top-notch jewellery business”.
During the period, Richemont reported a net shareholder loss of 760 million euros ($776.72 million) as it took a non-cash charge of 2.7 billion euros from online fashion retailer YOOX Net-A-Porter (YNAP) related to a partial exit .
But from continuing operations, which eliminated the impact of write-downs and YNAP losses, Richemont’s profit rose 40 percent to 2.1 billion euros.
Group sales rose 24 percent to 9.67 billion euros, helped by an improvement in Asia Pacific and a double-digit percentage increase in sales elsewhere, as previously locked-in customers returned to its luxury boutiques.
Shares in Richemont rose 12% a day before 1000 GMT.
While executives labelled the recent shortening of quarantine requirements as a “step in the right direction,” they warned that the situation remains highly fluid and unpredictable, with contingencies in different cities continuing to disrupt business.
Richemont, which also owns jeweler Van Cleef & Arpels, remained cautious about the future, adding that it would scale back some marketing and events to reflect a more sluggish economic environment in Europe and North America.
“Next year is hard to predict,” Cartier CEO Cyrille Vigneron told reporters.
“China should get better, but when, we don’t know,” he said. “There are signs of a recession in the U.S., but it’s not there yet, so we don’t know.
“Will there be an impact on Europe? Possibly, but we don’t know.”
Chairman John Rupert highlighted rising interest rates and cost-of-living pressures as potential risks, although analysts said the controlling shareholder had a reputation for being cautious.
Vontobel analyst Jean-Philippe Bertschy said: “Richemont is known for giving cautious guidance, and given the current challenging environment, this time is the focus.”
He added that the latest results showed “excellent sales growth, profit and cash flow results”.
(1 USD = 0.9785 EUR)
Reporting by John Reville, Editing by Miranda Murray, Shri Navaratnam and Catherine Evans
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