European luxury shares climb after Richemont delivers stronger-than-expected quarterly sales

European luxury stocks moved higher after Richemont (TG:RITN) reported first-quarter revenue that exceeded market forecasts, sending the Swiss luxury group’s shares up more than 7 percent and putting them on course for their strongest daily performance since April.

Jewellery division powers revenue growth

The owner of Cartier reported first-quarter sales of 6.33 billion euros at constant exchange rates, representing a 20 percent increase from a year earlier and comfortably ahead of the 5.90 billion euros forecast by analysts surveyed by Visible Alpha.

Richemont’s jewellery division, its largest business, generated quarterly revenue of 4.73 billion euros, an increase of 24 percent year on year. The performance marked the seventh consecutive quarter of double-digit growth for the division.

Luxury sector benefits from upbeat results

Richemont’s strong update lifted sentiment across the European luxury sector.

Hermes (EU:RMS), Kering (EU:KER) and LVMH (EU:MC) advanced between 2.4 percent and 2.9 percent during early trading. Swatch (TG:UHR) gained almost 4 percent, while Burberry (LSE:BRBY) rose 1.6 percent and Moncler (BIT:MONC) added 0.7 percent.

Analysts see further upside

Deutsche Bank said Richemont’s better-than-expected results, together with lower gold prices, are likely to drive meaningful upgrades to market earnings forecasts. The broker expects the shares to deliver a high single-digit percentage gain following the update.

Citi also highlighted the strength of the company’s core jewellery business across every major region, stating that it:

“continue to view one of the sector’s undisputed growth leaders as offering attractive upside potential.”

Richemont’s watchmaking division also delivered a solid performance, with quarterly sales increasing 8 percent.

Growth broadens across global markets

The company reported particularly strong momentum in the Americas and Asia-Pacific.

Revenue in the Americas increased 27 percent, accelerating from 18 percent growth in the previous quarter. Sales across Asia-Pacific, including China, rose 21 percent compared with 14 percent previously.

European sales grew 11 percent, while the Middle East returned to growth despite disruption linked to the conflict involving Iran, as stronger local demand helped offset weaker tourist spending.