Richemont

Group sales advanced by 10% yoy at constant and actual exchange rates, smashing consensus of 1%.

Jewelry is up 14% thanks to strong demand everywhere, especially in the holiday season.

All major regions posted double-digit growth, with the exception of Asia. Notably, all regions demonstrated an acceleration compared to previous quarters, including Asia. Sales in Asia declined by 7% YoY, primarily due to persistent weakness in Mainland China (-18% YoY). However, this was partially offset by improvements in other Asian markets and double-digit growth in South Korea.

This is a very strong performance by Richemont. As a reminder, Richemont is the largest player in hard luxury, notably thanks to Cartier its iconic jewelry brand. Therefore the X read to other listed companies is limited. Boucheron at Keing and Bulgari at LVMH are the most direct comparable brands but are diluted in the rest of the Maisons of each group. We remain cautious over the short term on the demand for luxury overall. The strong performance of Richemont is probably a more positive read across for high end luxury and Hermes could actually benefit from the X read. Hermes is already back to its all time high and is too expensive to our liking. On Richemont, we have a reduce rating but this is one of the rare stocks we would have. Indeed, we believe there is a speculative component at Richemont that can justify owning the stock.