Wealthy shoppers spend on jewelry only if it’s the right brand

With a diamond encrusted ring here and a rare gemstone necklace there, the world’s wealthiest are continuing to adorn themselves with the finest jewelry even as broader luxury shoppers pull back.

But make no mistake, one mother-of-pearl bracelet is not to be confused with another. As the super rich grow even more selective, increasingly only the best will do.

That spells positive news for Swiss luxury group Richemont, which boasts some of the luxury jewelry market’s most sought-after brands, including Van Cleef & Arpels, Buccellati and Cartier.

“Richemont’s jewelry brands are really at the top of consumer desirability,” Luca Solca, sector head for global luxury goods at Bernstein, told CNBC’s “Squawk Box Europe.”

“There’s no debate. Despite the efforts by LVMH to challenge this leadership, I think that other brands are clearly behind.”

Richemont on Friday reported better-than-expected fiscal fourth-quarter sales, led by 11% growth within its Jewellery Maisons division. For the full year, jewelry was also the group’s strongest segment, growing 8%.

The results round off a results season in which major luxury names from LVHM to Kering and Burberry reported a slowdown in sales in the quarter to March, dashing earlier hopes of a turnaround in the embattled sector.

Sales within LVMH’s watch and jewelry division, specifically, were flat year-on-year in the first quarter, having declined 2% on an organic basis in 2024 amid softer demand for key brands such as Tiffany & Co, Bvlgari, TAG Heuer and Hublot.

“We are gaining market share in jewelry, from branded and non-branded companies,” Richemont’s chairman Johann Rupert said during an earnings call Friday.

Despite the continued allure of its jewelry brands, however, Richemont is not entirely immune to wider sectoral headwinds.

The performance of its Specialist Watchmakers division, which features Piaget and Roger Dubuis, paints a more nuanced picture. Richemont’s watch sales fell 13% in 2024, led primarily by weakness in China. That rate of decline eased only slightly in the second half of the year, thanks to recovering strength in the Americas.

“The global watch market experienced a slowdown affecting volumes. This was led by demand weakness in China, with greater resilience of high-end price segments,” the company said in its report.

Clouding the picture further, many other premium Swiss watchmakers including Rolex, Patek Philippe and Audemars Piguet, are privately owned, making their performance difficult to decipher.

Macroeconomics aside, however, Bernstein’s Solca said the fundamental nature of the luxury watch market — where products are typically positioned as long-term, if not lifetime, purchases — inevitably makes it slow to rebound.

“Everybody and their dog has bought a watch out of Covid-19 and that will take a while to digest. So I expect watches to be on the backfoot for a while longer,” he said.

“People buy jewelry more frequently, and jewelry has become also cheaper relative to handbags last year, hence the better dynamic in that category.”

The growth of the high-end jewelry market versus other haute couture staples such as fashion and leather goods could stand Richemont in good stead amid resurging global trade headwinds.

Richemont’s Rupert said Friday that the company would not take price increases that it cannot sustain, contrasting warnings of prices rises from other luxury and jewelry players.

“The business is increasingly reliant on its jewellery arm and will hope the strength of its brands in this area will sustain it,” Russ Mould, investment director at AJ Bell said in a note Friday.

Nevertheless, analysts warn that the company may yet face challenges that threaten market dominance.

“Richemont continues to face several significant headwinds including the strength of the Swiss franc against the dollar, higher gold prices and the impact of tariffs,” Mould added.