Luxury stocks rally globally amid signs of recovery in demand
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Luxury stocks have surged worldwide after Richemont, which owns Cartier, posted soaring sales, as investors bet on a recovery for the sector. The FTSE 100 gained 91 points on Thursday to finish the day at 8,392, or a 1.1% rise. Watches of Switzerland’s share price rose 8% and Burberry’s rose 4% after Richemont surprised experts by posting a one-tenth increase in sales in its jewellery business over the Christmas season.
Investors were previously caught off guard when they presumed the cost-of-living crisis would not impact wealthy people and therefore the luxury goods sector would continue to thrive, but this turned out to be incorrect. Luxury goods companies saw a drop in demand and share prices were shaken across the sector.
The luxury sector has endured a two-year slowdown, with fashion, jewellery and other high-end retailers suffering falling sales amid stagnant demand from consumers. Russ Mould, an analyst at the investment firm AJ Bell, said investors “took Richemont’s update as a signal that the luxury goods sector’s slump was over”.
“Investors were previously caught off guard when they presumed the cost-of-living crisis would not impact wealthy people and therefore the luxury goods sector would continue to thrive, but this turned out to be incorrect. “Luxury goods companies saw a drop in demand and share prices were shaken across the sector.”.
