(News Bulletin 247) – The Swiss group that owns Cartier has published lower-than-expected growth in the first quarter of its 2023-2024 financial year, from April to the end of June. And, moreover, retail sales in China have slowed sharply.

The beginning of the week is rough for the most important and most glamorous compartment of the Paris Stock Exchange. This Monday, luxury groups suffered at the start of the session, dragging down the CAC 40 which lost 1% around 11 a.m.

LVMH fell 3.7% and Hermès lost 3.6% while Kering, the action with the least demanding market multiples in the sector in Paris, lost 1.8%. In Milan, Moncler drops 2.8%.

Luxury is weighed down both by declining Chinese indicators and by disappointing sales from Richemont, the Swiss owner of, in particular, Cartier.

“It’s a mix of these two elements that probably weigh in roughly the same proportions,” said a Parisian analyst.

>> Access our exclusive graphic analyses, and enter into the confidence of the Trading Portfolio

The Americas zone down at Richemont

Richemont also fell by 8.4% on the Zurich Stock Exchange, showing how the market does not forgive odds on publications in a sector where valuations are moving close to or even above their historic highs.

For its first quarter of the 2023-2024 financial year, which will end in March 2024, the Swiss company recorded sales of 5.32 billion euros, up 14% in published data and 19% at exchange rate. constant changes.

Problem: analysts were expecting slightly higher growth excluding currency effects, of 20%. “This first quarter is a little below expectations in all key regions”, dissects Royal Bank of Canada.

Thus, the Asia Pacific region (which includes China and represents 42% of sales) grew by 40% at constant exchange rates when the consensus was expecting 41%, while Europe recorded an increase of 11% against 12% expected. The “America” ​​zone was down 2% when analysts expected sales to be stable.

“The Americas should be the focus of investors’ concerns today, with the slight decline in sales in the first quarter, reflecting the decline in wholesale sales in the United States for specialist watchmakers (following the conversion of a number number of franchises in own-operated stores) and a sequential slowdown in the Americas for jewelry houses”, develops Stifel.

Chinese growth far from the mark

This disappointing publication is superimposed by a salvo of Chinese indicators at half mast. The most important for luxury remains retail sales, which rose only 3.1% year on year in June after rising 12.7% in May. Chinese growth is also proving disappointing, registering at an annual rate of 6.3% in the first quarter when economists were expecting a figure of 7.3% according to a consensus quoted by Deutsche Bank. Both internal and external demand both remain “sluggish”, notes the German bank.

Luxury stocks are sensitive to information on the macroeconomics and China in particular, the country hot on the heels of the United States as the world’s leading luxury market. The major players in the market do not communicate their direct exposure to China, but they are found in the Asia Pacific (or Asia) region excluding Japan, which represented 48% of Hermès’ turnover last year, 33% of Kering’s sales and 30% of LVMH’s revenues.

Still, these poor activity figures could push the Chinese government to officially act on the recovery measures hoped for by the market and which press reports have regularly reported.