Richemont shares fell as much as 9 percent on Friday after the Cartier owner reported slower growth in its jewelry business, even as total quarterly sales exceeded analysts’ expectations. Revenue rose 13 percent at constant exchange rates to €5.95 billion for the three months through September. The consensus estimate was €5.89 billion, Reuters reported, citing Visible Alpha.

Jewelry sales reached €4.41 billion and rose 14 percent at constant currencies, short of the 16 percent growth expected by analysts in a poll cited by Reuters. Sales at the company’s specialist watchmakers increased 12 percent to €833 million. The reaction highlighted how much of the valuation of Richemont, which also owns Van Cleef & Arpels and other luxury brands, depends on the pace of demand for jewelry.

Jewelry still accounted for most sales

The jewelry houses generated nearly three quarters of group revenue for the quarter. Their growth remained in double digits, but it was slower than the 24 percent increase in the preceding quarter, MarketScreener reported. The group’s interim announcement showed stronger jewelry growth over the full six months. Reading the two periods together shows where growth slowed, while leaving open whether the latest quarter represents a trend.

A currency-adjusted growth rate holds exchange rates constant to help compare sales across periods and regions. It answers a different question from the revenue converted into euros and reported in the financial statements. Over six months, group sales increased 17 percent on the constant-currency measure and 16 percent as reported. The gap was smaller for the group than the change in the jewelry growth rate from one quarter to the next.

Demand varied by market

Reuters reported that sales grew at least 15 percent in the United States, Japan and Europe, while mainland China remained weak. Hong Kong and Macao improved. These differences matter because the company’s exposure to China includes distinct markets, and a rebound in one market can lift a regional figure while demand in another remains subdued. An overall growth figure can therefore obscure where a company is gaining or losing momentum.

Richemont’s results come amid broader pressure on luxury spending. The Financial Times reported that the sector has been affected by weaker Chinese demand and instability in the Middle East, with some consumers pulling back. Richemont has benefited from its exposure to jewelry, both Reuters and the Journal reported. The jewelry results give investors a way to test whether that exposure continues to help the group when other luxury categories face weaker demand.

The financial statements show first-half profit increased to about €2.53 billion from €1.81 billion a year earlier. Richemont reported operating profit of about €3.1 billion and an operating margin of 25.5 percent. Excluding €229 million in positive tariff-related one-time items, it reported operating profit of about €2.9 billion and a margin of 23.6 percent, according to its interim announcement.

The two margin figures help separate an identified one-time benefit from the rest of the period. The company said the adjusted figure was still higher than the year-earlier margin, by 1.4 percentage points. It also cited elevated raw material costs. If those costs remain high, later results will show how much of the improvement carries forward through the prices the company charges, the number of items it sells and the mix of products its customers buy.

Richemont also reported about €7.7 billion in net cash at the end of September. Its interim disclosure identifies operating cash flow and proceeds from the disposal of its Avolta stake among the factors behind that position, alongside a higher dividend payment. Those items matter when comparing the results with the previous year. The cash position reflects both ordinary operations and decisions to sell assets and return money to shareholders.

A quarter of sales meets a longer-term test

Chief Executive Nicolas Bos said jewelry demand was supported by volume growth, Reuters reported, while Chairman Johann Rupert said the group was avoiding excessive increases in prices. The public sales report shows the combined result, but it does not give a full pricing and volume breakdown for each brand or market. That limits what readers can infer about whether customers are buying more pieces or spending more on individual purchases.

Friday’s share reaction put the focus on the pace of jewelry growth. Another quarter of results will help establish whether the 14 percent figure was a pause against a strong comparison or the beginning of a more persistent slowdown. Investors will also have a second test in margins. The next report can show whether operating profitability remains stronger once the tariff-related benefit is out of the comparison. For now, the group’s published figures show rising revenue and earnings alongside a slower rate of growth in its largest business. That combination explains why a result above the group revenue forecast could still disappoint shareholders focused on jewelry.