Today 4

Richemont H1 beats on jewelry strength as watch drag eases and tariffs abate

Bottom Line Impact

Jewelry led growth, easing watch headwinds, and tariff de escalation position Richemont for sustained high single digit revenue growth, 50 to 100 bps margin expansion potential, share gains in hard luxury, and reinforced brand equity with VICs through 2025.

Key Roles Affected

CEOCFOCMOHead of Watches

Executive Summary

Richemont delivered 10 percent constant FX sales growth to EUR 10.62b in H1, with Q2 double digit gains across all regions driven by resilient local demand and disciplined pricing in jewelry. Preliminary US tariff relief and Q2 watch growth remove key overhangs, supporting a stronger revenue mix, margin resilience, and upgraded near term outlook.

Actionable Insights

Immediate Actions (Next 30-90 days)
Accelerate jewelry capacity and China retail expansion while maintaining watch distribution discipline
Rationale: Jewelry grew 14 percent constant FX and is the locomotive of growth; Q2 watch uptick warrants disciplined recovery not volume chasing
Role affected:CEO
Urgency level:immediate
Deploy VIC led capsule launches and high jewelry roadshows in the US and Europe to lift ASP by 5 to 7 percent and repeat rates by 200 bps
Rationale: Sustained local demand and share price reaction confirm appetite for elevated experiences and Cartier newness
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Increase gold and FX hedge coverage to 70 to 80 percent for the next 12 months and reallocate 100 to 150 bps of opex to clienteling in Americas
Rationale: Pricing offset is working but input volatility remains; tariff relief frees funds to drive high ROI holiday conversion in strongest region
Role affected:CFO
Urgency level:short-term
Tighten wholesale to DTC mix by 300 to 500 bps and cap door count while prioritizing servicability and preowned certified programs
Rationale: Q2 growth is fragile; channel discipline and lifecycle services will protect margin and brand equity while demand normalizes
Role affected:Head of Watches
Urgency level:short-term

Strategic Analysis

Next 30 to 90 days benefit from jewelry led mix and pricing discipline into holiday, with Americas demand and early China stabilization underpinning Q3. Tariff de escalation reduces FY cost risk by up to EUR 200m to 250m vs prior scenario, enabling selective reinvestment in clienteling and high jewelry events.

Over 6 to 12 months, continued jewelry capacity expansion and store openings in China should compound ASP growth and VIC penetration, while watches stabilize from Q2 and move to low single digit growth with tighter distribution. Mix shift toward high jewelry and iconic lines supports structurally higher gross margin and lower volatility relative to fashion peers.

Richemont is pacing luxury top line growth in 2024 on jewelry momentum, outpacing soft leather goods and fashion at peers. Cartier and Van Cleef newness plus price recovery build share versus Bulgari and Tiffany, while watch normalization narrows the gap with Rolex affiliated and Swatch Group brands. Execution advantages in pricing, inventory turn, and VIC depth strengthen bargaining power with landlords and suppliers.

Gold and gemstone suppliers face firmer volume commitments and potential longer tenor contracts as Richemont scales jewelry manufacturing. Retail partners see tighter watch allocations and reduced discounting. End customers encounter higher ASPs and improved availability of core jewelry icons, with elevated service and bespoke offerings for VICs.

Risks & Opportunities

Primary Risks

  • Gold price and FX volatility could compress gross margin if pricing lags
  • China recovery remains uneven with traffic and tourism still below 2019 levels
  • US tariff policy uncertainty until final agreement is ratified and implemented

Primary Opportunities

  • Price recovery and mix shift toward high jewelry to expand gross margin by 100 to 150 bps
  • Americas demand strength to drive double digit holiday comps via VIC activation
  • Watches stabilization to low single digit growth with tighter distribution and higher sell through

Market Context

Jewelry remains the most resilient luxury category amid China normalization and fashion softness, with branded fine jewelry gaining share among Gen Z and millennials who value durability and resale. Richemont leverages iconic equity and VIC depth similar to LVMH jewelry houses, while peers exposed to discretionary fashion face lower pricing power. Watch demand is normalizing from 2021 to 2023 highs, with sell through discipline and certified preowned emerging as key levers for margin and brand protection. Sustainability and traceability in gold and stones are rising decision drivers and can reinforce pricing and client trust if embedded in storytelling and certification.

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