"Europe's top jewelry brand shows no sign of losing its luster.
The jewelry division of Swiss luxury goods company Richemont, which includes Van Cleef & Arpels and Buccellati as well as Cartier, grew sales by 27% for the three months through March compared with the same period of 2022. The company doesn't disclose the finances of individual brands, but Cartier is known to be Richemont's biggest. Morgan Stanley estimates its annual sales at around 10 billion euros, or $10.9 billion at current exchange rates, with a plush 33% operating margin.
In the latest sign that appetite for luxury goods is still healthy, brisk jewelry sales helped to push Richemont's total group revenue for its fiscal fourth quarter up by more than a fifth. That beat expectations, sending the company's shares up 3.5% Friday. They have gained 29% this year.
Demand for high-end jewelry has been booming since the global financial crisis -- maybe another side effect of loose monetary policy and the growing ranks of superwealthy people. While sales of non-branded fine jewelry have increased by about 4% a year since 2008, branded jewelry has grown faster. Van Cleef & Arpels and Cartier have expanded by roughly 15% and 11% a year respectively, according to Morgan Stanley.
Cartier has had more competition recently. Paris-listed LVMH, run by the world's richest person, Bernard Arnault, bought U.S. jewelry brand Tiffany & Co. for $16 billion in 2021 -- the most expensive deal in the luxury industry to date.
Mr. Arnault has tasked his son Alexandre with turning the brand around. Tiffany's designs and advertising campaigns are getting an overhaul, including an unusual new collaboration with sportswear brand Nike. Sales have already risen from around 4 billion euros in the brand's last full financial year before the pandemic to 5.3 billion euros last year, based on Morgan Stanley's estimates.
That still leaves it half Cartier's size. And narrowing the gap will be especially tricky for Tiffany this year because of where the two brands are based. Cartier has a large business in China, while Tiffany is more exposed to the U.S.
According to estimates from Bank of America, luxury sales in China could increase by 40% this year as spending recovers from Covid-19 lockdowns. Meanwhile, demand for jewelry is running out of steam in the U.S. after two years of blistering growth. Credit card spending data from Citi shows high-end jewelry purchases by American consumers fell 12% in April compared with the same month last year. Younger shoppers that supercharged growth in luxury sales during the pandemic have pulled back sharply.
Even backed by the world's deepest pockets, Tiffany will take time to turn around. Since buying Bulgari 12-years ago, LVMH has roughly tripled sales and doubled the brand's operating margins. Neither will be as big or lucrative as Cartier any time soon.
Those Communists are a good market to sell everything including luxury. Who would think? We, wild and primitive Lithuanians with funny beards, still have so much to learn about the world...
1. EXCHANGE --- Heard on the Street: Cartier Will Remain A Cut Above Tiffany --- The French brand does more business in China, which should help to maintain its edge in 2023. Ryan, Carol.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 May 2023: B.12.
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