Richemont’s Jewelry Dominance: A Beacon of Luxury Resilience Amid Sector Headwinds

The luxury market is at a crossroads. While tariffs, currency volatility, and post-pandemic saturation threaten traditional sectors like watches and handbags, one segment is thriving: high-end jewelry. Richemont, the Swiss luxury conglomerate behind Cartier and Van Cleef & Arpels, has emerged as the sector’s undisputed leader, capitalizing on the shift toward curated, aspirational jewelry. Its premium brands are outperforming peers like LVMH’s Tiffany and Bvlgari, offering investors a rare opportunity to bet on a sector that is both recession-resistant and positioned for long-term growth.

The Jewelry Advantage: A Shield Against Macro Uncertainties

Richemont’s jewelry division reported an 8% revenue increase in fiscal 2025, driven by double-digit growth in the Americas (+16%), Japan (+25%), and the Middle East (+15%). This contrasts starkly with its watch division, which declined 13%, reflecting broader market softness in Asia and the saturation of Swiss watchmaking.

Why is jewelry thriving? Three factors:
1. Frequency of Purchase: Jewelry is acquired more often than handbags or watches, with buyers treating it as a “status upgrade” rather than a one-time purchase.
2. Relative Affordability: A Cartier Love bracelet (€3,000) or Van Cleef & Arpels Alhambra pendant (€1,500) offers aspirational luxury at a fraction of the cost of a €100,000 watch.
3. Investment Appeal: Ultra-wealthy buyers view high-end jewelry as a tangible asset—akin to art or rare collectibles—bolstered by limited editions and heritage storytelling.

Richemont vs. LVMH: A Tale of Two Strategies

While Richemont’s jewelry division thrives, LVMH’s Watches & Jewelry segment reported 0% organic growth in Q1 2025, despite Tiffany’s January double-digit surge. LVMH’s brands face headwinds:
- Geographic Imbalance: Tiffany’s U.S. growth (driven by its iconic New York flagship) couldn’t offset weakness in China, where post-pandemic spending remains subdued.
- Brand Dilution: LVMH’s focus on broadening Tiffany’s product line—such as its “hardware” necklaces priced over $19,000—risks alienating its core customer base. Meanwhile, Bvlgari’s Serpenti exhibitions in Shanghai and Seoul, while culturally resonant, lack the pricing power of Cartier’s heritage collections.

Richemont, by contrast, has doubled down on its core strengths:
- Portfolio Optimization: Selling Yoox Net-A-Porter (YNAP) to Mytheresa in 2025 and acquiring Italian jewelry brand Vhernier to deepen its European heritage appeal.
- Price Discipline: Maintaining margins at 31.9% through strategic price hikes, mitigating gold cost pressures.

The Watch Sector’s Woes: A Cautionary Tail

Richemont’s watch division, encompassing Piaget and Baume & Mercier, saw sales drop 13%, with Asia Pacific (its largest market) declining 13%. The problem? Over-supply and post-pandemic fatigue. Buyers who splurged on watches during lockdowns are now shifting to jewelry, which offers both emotional resonance and financial upside.

Why Now Is the Time to Buy

Richemont’s stock trades at 16x forward earnings, a discount to LVMH’s 24x valuation, despite its stronger jewelry performance. Three catalysts suggest this gap will narrow:
1. Emerging Markets Rebound: As China’s luxury sector recovers—and U.S. wealth grows—Richemont’s geographic diversification (40% of sales in Americas/Europe vs. LVMH’s Asia-heavy exposure) will pay off.
2. Jewelry’s Structural Growth: The global high-end jewelry market is expected to grow 6% annually through 2030, outpacing watches and handbags.
3. Richemont’s Balance Sheet: With €8.3 billion in net cash and a 9% dividend hike, the company is poised to buy back shares or acquire niche brands.

Investment Thesis: Buy Richemont for Long-Term Luxury Dominance

Richemont is the rare luxury stock that combines defensive resilience with offensive growth. Its jewelry brands dominate a category that is both recession-resistant and poised for expansion. While LVMH and Kering struggle with geographic imbalances and brand complexity, Richemont’s focus on “best-of-breed” jewelry positions it to capitalize on the luxury market’s evolution.

Actionable Recommendation:
- Buy SWC LN at current levels, targeting a 20% upside within 12 months as jewelry sales outperform and macro fears subside.
- Hold for 3–5 years to capture margin expansion and share gains in a consolidating luxury sector.

The luxury landscape is shifting. In this new era, jewelry is king—and Richemont reigns supreme.