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Richemont Q1 FY26: Jewellery surges 11% as Asia drags watches

Bottom Line Impact

Mix shifts toward jewellery should support revenue growth and margin resilience while watch headwinds in Asia require swift inventory and pricing discipline to defend market position and brand equity.

Executive Summary

Richemont delivered 6% sales growth at constant rates in Q1 FY26, powered by Jewellery Maisons at 11% growth, while Specialist Watchmakers fell 7% at constant rates to €0.8b amid softness in China and declining sales in Japan. The mix shift reinforces jewellery as the profit and growth engine, while watches require swift inventory and channel recalibration in Asia to protect pricing and margin.

Actionable Insights

Immediate Actions (Next 30-90 days)
Accelerate jewellery capacity and clienteling by shifting 10-15% incremental capex and talent to Jewellery Maisons for H2 FY26
Rationale: Sustained 11% jewellery growth and category leadership can offset watch softness and lock in mix-driven margin resilience
Role affected:CEO
Urgency level:immediate
Reduce Specialist Watchmakers sell-in to China and Japan by 15-20% in Q2 to normalize stock cover to 10-12 weeks
Rationale: Aligning supply with demand prevents discounting, protects brand equity, and mitigates -10% reported decline amplified by FX
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Reallocate 20-30% of APAC watch marketing budget to private events and high-jewellery activations in EMEA and Middle East
Rationale: Redirect spend to regions demonstrating stronger conversion while maintaining HNWI engagement amid China and Japan softness
Role affected:CMO
Urgency level:short-term
Tighten cross-border price harmonization in watches by 1-2% where FX gaps widen and expand boutique-only exclusives
Rationale: Reduces arbitrage risk, supports full-price sell-through, and stabilizes perceived value as actual-rate declines pressure margins
Role affected:Chief Commercial Officer
Urgency level:short-term

Strategic Analysis

Next 30-90 days: rebalance inventory and sell-in for Specialist Watchmakers in China and Japan, prioritize jewellery allocation to outperforming regions, and tighten discount leakage to defend watch pricing as reported declines accelerate at actual rates due to FX.

Over 6-12 months, Richemont's mix will skew further to jewellery, supporting margin resilience and cash generation for selective capex. Watches need SKU rationalization, novelty cadence adjustments, and channel optimization in Asia to restore sell-out and avoid grey market spillover.

Jewellery outperformance strengthens Richemont vs watch-centric rivals and narrows the gap with diversified peers leaning on hard luxury. Persistent watch softness in China and Japan creates share risk to brands with stronger momentum in those markets but also opens white space for Richemont's jewellery to capture wallet share.

Suppliers: jewellery ateliers will operate at higher utilization while watch component orders may be trimmed. Partners: wholesale clients in Asia will see tighter allocations and stricter buybacks. Customers: heightened focus on high-jewellery and iconic lines with improved availability outside weak APAC nodes.

Risks & Opportunities

Primary Risks

  • Prolonged demand softness in China and continued decline in Japan extending the watch downcycle
  • FX headwinds widening reported vs constant-rate variance, pressuring margins and reported growth
  • Channel oversupply in Asia triggering discounting and grey market leakage for Specialist Watchmakers

Primary Opportunities

  • Jewellery leadership to capture wallet share and upgrade mix toward high jewellery and iconic lines
  • Selective reallocation of inventory to resilient regions to lift full-price sell-through and cash conversion
  • Clienteling and exclusive capsule drops to deepen repeat rates among top clients and offset traffic volatility

Market Context

The update fits broader luxury dynamics: China continues to slow with uneven category demand, Japan is normalizing after a multi-year surge, and hard luxury shows a split with jewellery resilience and watches under pressure amid secondary market softness. Compared with diversified groups, Richemont's jewellery strength is a relative advantage, while pure-play watch peers face greater downside. Sustainability and craftsmanship narratives remain key for next-gen consumers, favoring high-jewellery storytelling over volume-driven watch sell-in.

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