The Jeweller of Kings and the King of Jewellers

Compagnie Financière Richemont SA (Richemont) is a high-quality, globally diversified, hard luxury business that owns some of the world’s most desirable and enduring heritage brands. Its maisons[1] have legacies that span centuries and cannot be replicated, which raises the barriers to entry for competitors and protects them from technological disruption. The aspirational nature of its enviable brand portfolio affords Richemont significant pricing power and yields healthy margins over time. Its earnings are extremely high quality, denominated mainly in developed market currencies (largely US dollars or euros) and are supported by cash (10-year average free cash flow conversion = 92%). The group boasts a fortress balance sheet (approximately 7% of its current market capitalisation comprises net cash) and a stable ownership structure, which ensures the business is managed for the long term.

Figure 1a provides the 2025 group revenue split per region. Figure 1b illustrates that, in the same year, its jewellery maisons generated 72% of group revenue, although they delivered 99% of group profits – reinforcing their centrality to Richemont’s value creation. Cartier and Van Cleef & Arpels anchor the group’s leadership in the branded jewellery segment.

THE BRAND PREMIUM

‘Babe, I would trade the Cartier for someone to trust (just kidding).’ — Elizabeth Taylor, by Taylor Swift: The Life of a Showgirl

The global jewellery market is substantial, with Euromonitor estimating a total market size – branded and unbranded – of roughly €345 billion in 2024. Relative to other luxury categories such as watches, leather goods, and ready-to-wear, the jewellery category is far more fragmented (Figure 2a). Branded jewellery accounts for only about 40% of global sales, leaving significant room for brands to achieve long-term market share gains driven by premiumisation (Figure 2b).

Several structural forces are driving the continued shift from unbranded to branded jewellery:

• Brand desirability and origin: Consumers are attracted to the aspirational nature of heritage brands. Established jewellery brands are good marketers and storytellers, which boosts brand recognition. Independent players either do not market or market very little.
• Status and wealth signaling: This is especially true of Chinese consumers.
• Trust marks: Established brands ensure quality assurance and authenticity.
• Sustainability and ethical sourcing: Peace of mind that precious stones and metals have been sustainably and ethically sourced is an important consideration for younger customers.
• Store-of-value perception: The pricing of branded jewellery is transparent and comparable, unlike that of independents, where pricing can be opaque and subject to discounting. This is especially true for Cartier and Van Cleef & Arpels, where Richemont owns close to 100% of the store base (there are a small number of franchised stores), giving it full control of pricing. The store-of-value perception is reinforced by the high prices their pieces fetch on the secondary market when they come up for sale at auction. This resale value creates a halo over the brands and reinforces their investment appeal in the eyes of consumers.
• Increasing self-purchase by women: As more women participate in the economy, they are increasingly shopping for themselves rather than relying on gifting. This trend is especially true in the Middle East and parts of Asia.
• Expanded accessibility: As branded players grow their geographic footprint, the price ladder[2] has also expanded, which has increased the addressable market.
• Income growth: As consumers become wealthier, they gravitate to brands.

Figure 3 shows that, despite consolidation, major luxury groups today hold only around 8% of the total jewellery market – highlighting the category’s immaturity and the meaningful headroom for sustained growth.

THE JEWEL IN THE CROWN

Richemont is the best-positioned player in the global branded jewellery market. Its maisons, Cartier and Van Cleef & Arpels, enjoy unrivalled heritage and desirability. Cartier’s Love and Trinity collections, and Van Cleef & Arpels’ Alhambra line, are iconic and rank among the world’s best-selling jewellery collections.

This combined desirability has allowed Richemont to consistently outgrow the broader jewellery market over time (Figure 4).

This has consistently enabled Richemont to gain market share within the branded jewellery segment, which is, itself, gaining share from unbranded jewellery. Figure 4 also shows a track record of consistent positive revenue growth; only marginally going negative in 2009 during the Global Financial Crisis. This bears testimony to the structural growth drivers of the branded jewellery market and the strength and desirability of its jewellery brands.

The strong recognition of Cartier and Van Cleef & Arpels has empowered these brands to expand into the entry and mid-tier segments with product lines such as Love, Trinity, and Juste un Clou for Cartier, and Alhambra for Van Cleef & Arpels. Not only do they expand Richemont’s total addressable market, but they are also highly profitable.

The key challenge facing jewellery brands globally is how to brand their products. While consumers generally cite design as the main reason for a luxury purchase, countless studies have shown that status is a strong driver of the purchase decision. Both factors favour Cartier and Van Cleef & Arpels, as these recognisable and accessible product lines attract new cohorts of aspirational consumers and generate significant profit.

This generates higher gross and operating margins. This is a lot harder to do with more commoditised products, such as engagement rings and high-end jewellery, where the price of the precious stones often matters more than the brand. The result is that not only are Cartier and Van Cleef & Arpels two of the world’s largest jewellery brands, but they are also two of the most profitable, as evident in Figures 5a and 5b.

AN EVEN SPREAD

‘Luxury goods are the only area in which it is possible to make luxury margins.’ — Bernard Arnault, Chairman and Chief Executive of LVMH Moët Hennessy Louis Vuitton

Historically, sales to Chinese consumers, both in mainland China and to Chinese tourists spending abroad, comprised approximately 40%-50% of Richemont’s total sales. This is true for most luxury houses. High duties and taxes in China are the primary reasons why the Chinese consumer prefers to shop for luxury goods abroad. The price of a luxury item in China can be c. 30% more expensive than in Europe. This gap widens when taking VAT refunds into account.

Travel restrictions imposed during the Covid pandemic resulted in a significant fall-off in Chinese luxury tourism spend. While some of this spend was repatriated to the mainland, the net result was an overall decline in luxury sales to the Chinese. This, coupled with protracted weakness in the property market, adversely impacted the wealth of the Chinese consumer. This, in turn, remains a significant headwind to luxury sales to the Chinese, which are still below pre-pandemic levels.

The pandemic catalysed a strategic pivot. With reduced tourist spend, maisons refocused on local clientele and expanded thoughtfully into underpenetrated markets. The result is a more balanced revenue mix across the Americas, Europe, and Asia-Pacific.

Covid restrictions temporarily cancelled several of Richemont’s in-person events, which are used to market and showcase its new products and designs to customers. In response, Richemont embraced online and social media to market, connect, and communicate with existing and prospective customers. This delivered several benefits, not least of which was increased brand awareness among new customers, improving the efficiency of marketing and communication spend. A case in point is inspiring aspiration in millennials, who witnessed beloved celebrities and social media influencers wearing Richemont’s products.   

PRICING POWER AND DISCIPLINED EXECUTION

In summary, Richemont possesses some of the strongest pricing power in global luxury, particularly within jewellery. Iconic pieces often fetch significant premiums at auction, reinforcing their status as stores of value. Despite this, Richemont has exercised exceptional pricing discipline, especially compared with soft-luxury peers (Figures 6a and 6b).

Cartier and Van Cleef & Arpels have shown enormous restraint in raising prices, despite significant cost pressures from rising raw material inputs (most notably gold), adverse currency fluctuations (strong Swiss franc), and tariffs imposed on imports into the US. This conservatism has created a pricing reservoir that Richemont may dip into to offset cost pressures, preserve margins, and grow earnings.

CONCLUSION

Richemont’s earnings have tripled since the Covid pandemic, driven primarily by its jewellery maisons. The share price has outperformed the FTSE/JSE Capped Shareholder Weighted All Share Index over multiple time horizons. Despite this outperformance, we remain bullish on Richemont’s ability to compound revenue in euros, supported by powerful structural tailwinds in branded jewellery and disciplined pricing execution. It trades on a forward price-to-earnings multiple of 21 times (excluding net cash), which we consider compelling, given the group’s quality and long-term growth runway. It remains a jewel in our clients’ portfolio.

^{[1] French term meaning “house”, commonly used in the luxury industry to refer to an established brand or fashion house
[2] The range of price points offered by a brand, starting at entry-level through to core and high end}

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