Richemont Shares Are Not Immune to Macro Headwinds

Richemont (SIX: CFR) shares were cut to Neutral by Goldman Sachs in a recent research note, with the investment bank stating that the company is “not immune to macro headwinds.”

The bank continues to like the company's long-term growth opportunity, which they state is underpinned by the Jewellery Maisons. However, they believe the company could run into broader headwinds impacting the luxury sector.

“We see a tough six months ahead for the luxury peers,” said the investment bank's analysts. They noted that the third quarter sales miss at LVMH reflected a sharper deterioration in the spending of the Chinese Cluster than they had anticipated, particularly to Japan.

French luxury giant LVMH posted a 3% decline in third-quarter sales. The company said the slight decline in revenue mainly arose from lower growth seen in Japan, essentially due to the stronger yen. In addition, Hennessy cognac was held back by weak local demand in the Chinese market.

For Richemont, Goldman Sachs has updated its forecasts. They now predict that Richemont's group sales will decline by 4% in the second quarter of 2025 (ending September) compared to the previous quarter, which was expected to be flat.

The bank also downgraded the stock to Neutral based on their view that consensus sales growth estimates look demanding with risks to operating margin.