Richemont Shares Rally Amid Strong Fiscal First-quarter Sales
Shares in Compagnie Financière Richemont (CFR.SW, CFR.JO) surged Wednesday morning after the luxury goods company reported a 20% year-over-year jump in fiscal first-quarter sales.The Cartier brand owner's group sales for the three months ended June 30 increased to 6.33 billion euros from 5.41 billion euros a year earlier. The sales were up 20% when measured in constant currencies and 17% higher at actual exchange rates."Richemont has delivered a strong Q1 update, with group cFX sales growth of +20% comfortably over consensus +11% (DBe +10%) and an elevated buy-side bar at c. +16% plus. The beat was driven by broad-based strength across regions and segments," Deutsche Bank analysts said in a quick-take note."Overall, this was a solid print and we view the results as a positive read-across for the broader luxury sector although it remains to be seen how much of the strength was luxury spend, jewellery driven versus Richemont specific," Deutsche Bank added. "This is a very strong performance against high expectations and, combined with the gross margin tailwinds from falling gold prices, should support material consensus EPS upgrades today and we see the shares up [high single digits]%."Richemont's stock was up more than 6% in Zürich and Johannesburg during early morning trading.The jewellery segment, which is the company's largest revenue contributor, recorded the biggest hike in sales. With a 24% rise at constant rates, jewellery sales increased to 4.73 billion euros from 3.91 billion euros.Sales at the fashion accessories and watches segments were up 9% and 8%, respectively, at constant exchange rates.Region-wise, Richemont saw double-digit-percentage growth in sales across Asia Pacific, the Americas, Europe and Japan, while the Middle East and Africa region returned to growth. Sales in Asia Pacific increased 21% at constant rates to 2.07 billion euros, while the Americas recorded a 27% jump to 1.67 billion euros."Consensus seems too fast in anticipating mean reversion in the Richemont's growth. We expect significant upward revisions to FY27E estimates as a consequence of a strong start of the fiscal year," Bernstein said in a separate quick-take note.
