Richemont reported fourth-quarter revenue of €5.8 billion on May 22, beating consensus estimates by 4.2% as Japan jewellery sales rose 22% year-over-year and offset an 18% decline across Middle East markets. The Geneva-based conglomerate, which operates Cartier, Van Cleef & Arpels, and eleven other maisons, saw its jewellery division—71% of group revenue—grow 9% at constant exchange rates while watch revenue contracted 3%.
The Middle East slowdown, concentrated in UAE and Saudi Arabia, began in Q3 2025 and accelerated through year-end as Chinese tourist flows redirected toward Japan following visa policy changes in October. Richemont's Gulf retail footprint, which generated €1.1 billion in FY 2025, saw traffic decline 26% in the quarter while average transaction value held flat at €8,400. The company closed three boutiques in Dubai and delayed two Saudi openings originally scheduled for Q1 2026.
Japan became the surprise counterweight. Richemont's Tokyo, Osaka, and Kyoto locations reported jewellery comps up 31% in the quarter, driven by Chinese nationals and domestic buyers capitalizing on yen weakness. The yen traded at 158 to the dollar in April, making Cartier Love bracelets 19% cheaper in Tokyo than in Shanghai. U.S. jewellery sales rose 7%, concentrated in New York, Miami, and Los Angeles, where Cartier opened two new concept stores in March. Watches remained weak globally—Swiss export data for April showed mechanical watch shipments down 11% year-over-year, pressuring Richemont's specialist brands like Jaeger-LeCoultre and Panerai.
The divergence matters because it signals a structural shift in luxury jewellery flows, not a temporary dip. Chinese consumers, who represent 38% of global hard luxury purchases, are redistributing spend toward Japan and away from traditional Gulf hubs. Richemont's management noted on the May 22 call that Japan sales in April alone were up 40% year-over-year, suggesting the trend is accelerating. The company also flagged that Middle East comps may stabilize in Q2 2026 as comparisons ease, but gave no guidance on recovery timing. Inventory levels in Gulf markets remain elevated—up 23% sequentially—which will pressure wholesale margins if destocking extends into the second half.
Operators should monitor June retail sales data from Japan's Ministry of Economy, typically released mid-July, for confirmation that jewellery momentum persists post–Golden Week. Watch Richemont's wholesale shipments to Middle East partners in Q1 FY 2027 results, due in July, for signs of channel destocking or further boutique consolidation. The company's online direct-to-consumer platform, which grew 14% in Q4, may offer margin relief if physical retail in the Gulf continues to underperform. Currency moves matter—if the yen strengthens past 150 to the dollar, Tokyo's pricing advantage erodes and Chinese buying could rotate back toward Hong Kong or domestically.
Richemont's jewellery strength is now carrying the group. Full-year FY 2026 revenue reached €22.1 billion, up 6%, with operating margin at 21.3%—within guidance but compressed 90 basis points from FY 2025 due to watch division drag and Middle East markdowns. The stock closed May 22 at CHF 142, up 2.1% on the day, still 8% below its November 2025 high. Japan jewellery demand is real, but it is also yen-dependent, visa-dependent, and concentrated in three cities. The Gulf weakness is structural until Chinese travel patterns normalize or domestic demand in Saudi Arabia matures, neither of which happens on a quarterly calendar.
The takeaway
Richemont's Japan jewellery surge masks Gulf structural decline—watch June data and yen levels for sustainability.
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