Richemont's Currency-and-Gold Maze: Tariff Reclaims and Jewellery Resilience Shape FY26
Fiscal 2026: Growth Under Pressure
Richemont delivered another resilient year, with group sales up 11% at constant exchange rates to EUR 22.4 billion and operating profit up 23% at constant rates to EUR 4.5 billion. The Jewellery Maisons once again led the charge, posting 14% constant-currency growth, driven by iconic lines (Love, Alhambra) and successful novelties. However, the glossy headline masks a sharper underlying strain: the gross margin fell 250 basis points to 64.4%, squeezed by raw material costs—particularly gold price—and U.S. tariffs that together added roughly EUR 200 million in duties. CFO Burkhart Grund explained: “About 2/3 of the increase in production costs were driven by the net impact of higher raw material costs, notably gold. The remaining 1/3 was mostly due to the additional U.S. duties that amounted to circa EUR 200 million.” — Burkhart Grund, Executive · 2026-05-22 Despite this, the company maintained its cost discipline and delivered a 23% constant-currency operating profit increase, highlighting the power of its differentiated brand portfolio.
The Tariff Angle: A Potential Refund?
The tariff issue has taken a new turn. With the U.S. Supreme Court ruling opening the door for potential refunds on IEEPA duties, the Chairman, Johann Rupert, acknowledged the group is actively deliberating. In a characteristically blunt remark, he said:
He further stressed the need to avoid passing tariff costs onto consumers, noting the group deliberately did not use pricing to offset tariffs. This potential tariff refund could provide a meaningful tailwind to gross margin in fiscal 2027, especially if combined with easing gold prices. The topic of tariffs is not new—global earnings calls in the last two quarters have been dominated by tariff-related keywords like "IEEPA refund" and "tariff impact"—but Richemont's stance is notable for its restraint and focus on customer value.I won my bet. I won my bet. Dinner, thank you. I'll tell you the name of the restaurant. I said, Luca Solca is going to pick up on the fact of the tariffs. How much? And what are we going to do? Luca, we haven't decided.
China and the Americas: Regional Divergence
Geographically, the Americas were the standout performer, posting a 17% constant-currency increase for the full year, while Asia Pacific grew 8% and Japan 9%. In China, the group is seeing stabilization rather than a rapid rebound. CEO Nicolas Bos commented: “We don't bet on China coming back to growth patterns that we've seen years ago, but we feel it's a very important moment to consolidate the presence of our brands over there.” — Johann Rupert, Chairman · 2026-05-22 This echoes his comments from November 2025, when he noted an improvement in Greater China but cautioned about a "new level of sophistication" in demand. “We've definitely seen an improvement, particularly in the last quarter... but it's a market that is reaching another new level of sophistication and of quality of demand.” — Nicolas Bos, CEO · 2025-11-17 The strategic right-sizing of the store network in China—closing underperforming points of sale while opening flagship locations—reflects a long-term commitment to brand equity over short-term volume.
Portfolio Simplification and Financial Strength
Under the surface, Richemont continues to prune its portfolio for efficiency. The pending sale of Baume & Mercier to the Damiani Group is part of a broader simplification drive. Chairman Rupert was adamant: "Those days are over now. We want complexity refined to simplicity." This focus is supported by a rock-solid balance sheet—net cash of EUR 8.5 billion—which enables continued investment in manufacturing and retail while returning capital to shareholders via a 10% dividend increase and a special dividend. While macro headwinds remain, Richemont's combination of iconic brands, disciplined cost control, and optionality on tariff refunds positions it well to navigate the volatility.