Julius Young — Founder & Editor-in-Chief, Vantage
Richemont's jewelry maisons grew 24% in the most recent quarter while LVMH's leather goods division managed just 1% and Kering's stayed flat. Jewelry has become luxury's most reliable growth engine.
Richemont closed its fiscal year with group sales of 22.4 billion euros, up 11 percent at constant exchange rates, and followed it with a first fiscal quarter that grew 20 percent. The engine behind both results: Cartier, Van Cleef and Arpels, Buccellati, and Vhernier combined for 24 percent constant-currency growth in the most recent quarter, their seventh consecutive quarter of double-digit gains. For the full fiscal year, the jewelry division generated 16.5 billion euros in sales at a 30.5 percent operating margin, by far the most profitable part of Richemont's business.
The contrast with the rest of the industry's core category is stark. LVMH's watches and jewelry division grew 11 percent in its most recent quarter, while its much larger fashion and leather goods division managed only 1 percent growth after seven consecutive quarters of decline. Kering's jewelry business grew 18 percent in the same period while its fashion division was flat.
A jewelry purchase tends to be a considered, occasion-driven purchase made by an established, loyal client, far less exposed to the entry-level handbag buyer who has pulled back sharply amid broader luxury caution. Richemont's direct-to-client sales now account for 77 percent of group revenue, reflecting decades of controlling the full client relationship, infrastructure that took decades to build and that fashion-first houses are now racing to replicate. Related: Why Hermes Has a 41% Operating Margin