Compagnie Financière Richemont SA

Goldman Sachs initiated coverage of 10 European luxury stocks, assigning Buy ratings to just four, as it argued that muted sector growth will not last and that 2027 will mark a turning point after three years of post-COVID normalization. Analysts led by Erwan Rambourg said the slowdown in sales has been driven less by macro headwinds than by aggressive pricing and a slower pace of innovation, both potentially linked to a degree of strategic inertia, noting that traditional luxury brands raised prices by about 60% between mid-2019 and mid-2026. Goldman forecasts organic sales growth for its coverage rising from 6% in 2026, on depressed 2024 and 2025 comparisons, to 7% in 2027, with the sector reverting to mid-single-digit growth, and expects U.S. outperformance to extend into 2027 and beyond, a mechanical rebound in the Middle East and stabilizing sales in China, while Europe stays muted apart from American tourist flows. The four Buy-rated stocks are Richemont, LVMH, Moncler and Prada, with price targets of CHF225, €500, €62 and HK$52 respectively. Goldman initiated Kering, Burberry and Brunello Cucinelli at Neutral and kept Zegna at Neutral, while starting Hermes and Swatch at Sell.

Compagnie Financiere Richemont SA announced a total dividend of $0.54 per share, consisting of a $0.12 per share special dividend and a $0.41 per share cash dividend, with an ex-dividend date of 2026-09-17 and payment on 2026-10-13. The luxury goods conglomerate, whose Jewellery Maisons including Cartier and Van Cleef & Arpels account for over 70% of revenue, carries a 12-month trailing dividend yield of 1.76% and a forward yield of 1.91%. Its annual dividend growth rate was 7.90% over three years, 20.30% over five years, and 5.90% over the past decade, giving a five-year yield on cost of approximately 4.43%. As of 2026-03-31, the payout ratio stood at 0.53, with a profitability rank of 10 out of 10 and a growth rank of 10 out of 10, though three-year earnings per share declined about 5.20% annually and revenue grew roughly 0.30% per year.

China's tentative luxury spending recovery appears to be losing momentum, with early third-quarter data showing a sharp slowdown that raises the risk of another false dawn for the sector, according to Bernstein analysts. Luxury shopping mall sales in mainland China weakened sharply in June and July, culminating in a 12% year-over-year decline in July, following broadly flat growth in the first quarter and low-single-digit growth in the second. The slowdown interrupts a gradual revival over the previous four quarters, as consumer confidence remains depressed and middle-class shoppers are weighed down by weaker economic growth and substantial price increases implemented by luxury brands. New tax measures, including greater scrutiny of offshore wealth and tougher enforcement, are curbing spending among high-net-worth individuals, who had remained resilient. In response, Bernstein cut its third-quarter industry organic growth forecast by 110 basis points to 4.9%, down from 6.3% in the second quarter, and trimmed the full-year 2026 estimate by 40 basis points to 5.1%. Performance is diverging sharply among brands, with Zegna, Gucci, and Richemont's Jewellery Maisons showing relative strength, while LVMH has been weaker. Richemont remains the preferred luxury name, while Gucci's 20% to 30% price cuts could support Kering's near-term performance but risk weakening brand equity over time.

China and Switzerland have reached a new trade agreement, under which China will exempt import tariffs on 99.8% of the current value of Swiss exports, covering key goods such as watches, pharmaceuticals, and high-precision instruments. Swiss investors will also gain greater access to the Chinese market. The agreement marks a significant upgrade in trade relations between the two countries and supports shares of Swiss companies with business tied to the Chinese market, especially luxury goods makers such as Swatch Group and Richemont. China is currently Switzerland's third-largest trading partner after the European Union and the United States, with bilateral trade last year worth about 34 billion Swiss francs, or around 43 billion dollars. The new agreement also adds provisions on labor rights and the environment in a chapter on sustainability, and for the first time China has agreed to reference the Universal Declaration of Human Rights within a free trade agreement. The two countries plan to formally sign the new agreement by the end of 2026.

The jewelry business is emerging as a key growth driver for the luxury goods industry, as fashion sales continue to slow and Middle East conflicts weigh on consumer purchasing power. Analysts at Vontobel note that jewelry consistently delivers growth and boasts standout margins relative to its business size. Carole Madjo, head of European luxury goods research at Barclays, says consumers are growing tired of high-end fashion that lacks novelty, while the sustained rise in gold prices is drawing more attention to jewelry as an investment asset. This trend is reflected in the results of Richemont, owner of Cartier and Van Cleef & Arpels, whose jewelry sales surged 24 percent in the quarter ending June, far exceeding analyst expectations. Meanwhile, LVMH, owner of Bulgari and Tiffany, is also expected to post stronger performance in its watches and jewelry division. Barclays has raised its growth forecast for LVMH's watches and jewelry business in 2026 to 8 percent from 7 percent, well above the 3 percent growth rate in 2025. This division is LVMH's third-largest business unit, accounting for 13 percent of its total revenue of 81 billion euros in 2025. Kering, owner of Pomellato and Boucheron, disclosed in April that its jewelry sales rose 22 percent in the first quarter year-on-year, the highest growth rate among all its businesses. Madjo adds that even brands with strong fashion and leather goods heritage, such as Hermès, Prada, and Gucci, are placing greater emphasis on jewelry, as it is a category delivering standout growth at this time. The market is watching earnings announcements from major luxury goods makers this week, with LVMH reporting on Monday, July 27, followed by Kering on Tuesday, July 28, and Hermès on Wednesday, July 29.

Japanese luxury jewelry sales reached a record high in the first half of 2026, driven by domestic consumers seeking stores of value amid a weak yen and rising living costs. Sales of gems, precious metals and artwork at Japan's department stores rose 19% year over year to 330 billion yen, or about $2 billion, the highest for the period since records began in 2008. This growth far outpaced the 3.2% increase in overall department-store sales, while duty-free sales also rose 3.2%, indicating domestic shoppers were the main force. The yen trades near 164 per dollar, its weakest since the 1980s, and core consumer prices excluding fresh food rose 1.6% in June. Tokyo-based jewelry maker Happiness and D has shifted more of its business toward jewelry, with its president noting it is becoming more common for consumers to hold 5% to 10% of their assets in gold rather than cash. Bloomberg Intelligence analyst Catherine Lim observed that Japanese consumers are increasingly choosing branded jewelry over handbags as higher living costs make them more selective. Luxury groups with strong jewelry portfolios are benefiting: Richemont, owner of Cartier, reported a 20% year-over-year sales increase in its latest quarter, with Japan delivering the strongest regional performance led by jewelry, while Kering reported a 57% increase in Japanese jewelry sales during the first quarter even as its fashion and leather-goods business in the country declined 14%.

Richemont reported a 20% sales increase at constant exchange rates for the three months through June, nearly double the Bloomberg consensus forecast of 11% growth. The Swiss luxury group behind Cartier and Van Cleef & Arpels saw its shares jump as much as 7.4% to a record in Zurich, the largest intraday gain since early May. The jewelry division, which accounts for about three-quarters of the business, grew 24%, led by the Americas, while the specialist watchmakers division rose 8% with strong performances from Vacheron Constantin, Jaeger-LeCoultre and A. Lange & Sohne. Sales expanded across all regions, including a return to growth in the Middle East and Africa and a more than 20% increase in Asia-Pacific. Richemont ended the quarter with a net cash position of 9.1 billion, including 400 million from the sale of its stake in duty-free operator Avolta.

European stocks were subdued on Wednesday as escalating Middle East tensions overshadowed upbeat earnings results from companies including ASML Holding and Richemont. The pan-European STOXX 600 was marginally lower at 641.80 after rising 0.2 percent on Tuesday, while the German DAX dipped 0.6 percent and the UK's FTSE 100 slid 0.2 percent. ASML Holding surged over 4 percent after the Dutch chip equipment supplier lifted its annual sales forecast for the second time this year due to surging AI spending. Swiss luxury group Richemont soared 5.7 percent after reporting better-than-expected quarterly sales, helped by booming demand for its jewelry business. Other notable movers included Dr. Martens rising 1.3 percent after backing its annual outlook, Hunting jumping 5 percent on solid first-half trading, and B&M European Value Retail slumping 4.5 percent on modest first-quarter sales growth.