Richemont soundly beat analyst expectations for sales in the third quarter, reporting a 32 percent rise in sales to 5.658 billion euros ($6.41 billion) compared to the same period last year, almost two times the 17 percent consensus from industry analysts. The Swiss luxury goods group – which owns Cartier, Alaïa, Baume & Mercier, Buccellati, Chloé, Officine Panerai, Piaget, Yoox Net-a-Porter, and Van Cleef & Arpels, among others – touted double-digit sales growth across all regions, channels, and business areas for the three-month period ending on December 31, noting that its strongest performance came from the Americas where sales were up by 55 percent on a year-over-year basis and Europe (up 42 percent), and its Jewellery Maisons, which were the strongest performing business area, followed by Specialist Watchmakers, Online Distributors, and the Other business area (primarily Fashion & Accessories).
Diving into sales within its individual divisions, Richemont revealed that a “stellar” 57 percent of sales came from the Jewellery Maisons, including Buccellati, Cartier, and Van Cleef & Arpels, driven across various “product lines and price points.” Specialist Watchmakers saw sales increase by 20% percent with double-digit growth in most regions and watch Maisons. And sales for its Online Distributors were also up, rising by 19 percent thanks to “strong trading at YOOX and THE OUTNET” and the “solid performance” of Watchfinder. Finally, Richmeont reported a 19 percent increase in sales from its Other business area, with “noteworthy sales performance [coming from] Alaïa, Chloé and Peter Millar.”
“All channels delivered growth, led by the offline and online retail channels that recorded sales growth of 56 percent and 40 percent, respectively,” the Group stated, noting that retail sales were “particularly robust” in China, Dubai, South Korea and the USA. Meanwhile, wholesale channel sales were 4 percent higher than in Q3 2019, sustained by “significant sales in China and the USA.”
The retail versus wholesale breakdown is a particularly interesting one, with the former driving 78 percent of Richemont’s total sales. Speaking to these results, Neev Capital managing director Rahul Sharma stated on Wednesday that the pandemic has proven to be “a boon to brands trying to reshape distribution,” namely by increasing their share of direct-to-consumer sales as part of an enduring effort by the Johan Rupert-led group to tighten control over its wholesale operations and focus on its direct retail channel. Sharma pointed to the fact that direct retail sales account for 71 percent of star brand Cartier’s sales, up by 10 percentage points in just two years.
Reflecting on the state of the market as a whole, Sharma says that it is “still very much a two-tier luxury market, where iconic brands from Hermes to Dior are doing dramatically better,” citing a 55 percent rise in Cartier sales compared to the same quarter in 2019, and the 8 percent increase in Q3 sales reported this week by Prada. Although, it is “still a very strong environment for everyone.”