Over the last 15 years, Richemont increased the contribution of jewellery as a percentage of total sales to 51% from 24% and shifted its cost base to be more variable and less fixed. During downturns, jewellery tends to be more resilient in terms of sales and margin decline, but also bounces back faster than other luxury goods such as watches. Cartier is a market leader in jewellery, with a broad product offering in terms of type, geographical availability and price point.
China has been a key driver of growth for Richemont and other luxury names for some time now, and whilst its zero-COVID-19 policy was a negative factor impacting sales, spending is picking up post reopening. Furthermore there remains plenty of growth runway in the region, as just a fraction of China’s high income population are currently classed as ‘luxury shoppers’.
