Richemont reported impressive quarterly results on Thursday, driven by festive season sales, even as weak demand in China weighed on performance. The Swiss luxury goods giant’s robust earnings sent ripples through the European luxury sector, lifting share prices of major rivals.

Richemont’s stock surged over 16% to reach a record high of ₣161.8 (€172.45) on the Zurich Stock Exchange, marking its largest intraday gain since October 2008. The company has been a standout performer, with its share price up 21% in 2024, contrasting sharply with declines seen in other major luxury players such as LVMH and Kering last year.

Strong Fiscal Third-Quarter Performance

For the fiscal third quarter of 2025, Richemont reported sales revenue of €6.2 billion, a 10% increase year-on-year, exceeding analyst expectations. While sales in mainland China, Hong Kong, and Macau collectively fell by 18%, resulting in a 7% decline in the Asia-Pacific region, robust growth in Europe, the Americas, Japan, and the Middle East & Africa offset the weakness.

European revenue surged by 19%, bolstered by increased domestic demand and higher tourist spending from North America and the Middle East. The Group’s Jewellery Maisons—Buccellati, Cartier, Van Cleef & Arpels, and Vhernier—achieved 14% growth, driven by iconic jewellery and watch collections during the festive season.

However, Specialist Watchmakers experienced an 8% drop in revenue year-on-year, reflecting the challenges in the Asia-Pacific market. Despite this, strong growth in the Americas and the Middle East & Africa mitigated the impact, reducing the year-to-date segmental decline to 16%.

Year-to-Date Highlights

For the nine months ending December 31, 2024, Richemont recorded a 4% increase in sales at constant currency, with net cash rising to €7.9 billion from €6.8 billion in 2023. The company ended the fiscal year 2024 with record full-year sales of €20.6 billion, though quarterly sales dipped by 1% due to the Asia-Pacific slowdown.

CEO Nicolas Bos, who took over in June 2024, is credited with steering the group toward growth in alternative markets, mitigating the effects of weakened Chinese demand, a factor emphasized by former chairman Johann Rupert.

Luxury Sector Optimism

Richemont’s results buoyed the Euro Stoxx 600 Luxury Ten Index (STXLUXP), which rose nearly 7% on Thursday. Stocks of rivals LVMH, Hermès, Christian Dior, and Kering gained 9%, 4.9%, 8.6%, and 6%, respectively.

Analysts are divided on whether the downturn in Chinese luxury spending is cyclical or structural. With China accounting for a significant portion of the Asia-Pacific market, brands heavily reliant on Chinese consumers may face continued challenges in 2025. However, optimism surrounding Richemont’s results has injected renewed confidence into the sector ahead of upcoming earnings reports.

Germany’s year-on-year inflation rate for December was confirmed at 2.6%, according to the Federal Statistical Office, marking the third consecutive month of growth and the highest rate since January 2024. The increase was driven primarily by rising services and food prices, leaving inflation above the European Central Bank’s (ECB) 2% target.

Key Drivers of Inflation

Services prices surged at an annual rate of 4.1% in December, slightly higher than November’s 4%. Food prices also saw an uptick, climbing to 2% from 1.8% in the previous month. Meanwhile, energy prices, which had been declining, fell at a slower pace in December, recording a decrease of 1.6%, compared to a 3.7% drop in November.

Month-on-month inflation also rose, reaching 0.5% in December, up from a decline of 0.2% in November and exceeding preliminary estimates of 0.4%.

For the entire year of 2024, the average inflation rate stood at 2.2%, a significant drop from the 5.9% recorded in 2023. Core inflation, which excludes volatile items such as food and energy, fell to 3% in 2024 from 5.1% the previous year.

Economic Contraction Continues

Germany’s economy shrank by 0.2% in 2024, following a 0.3% contraction in 2023, according to recently released gross domestic product (GDP) data. The contraction reflects ongoing challenges in key sectors.

Manufacturing output declined by 3% in 2024, weighed down by sluggish performance in the car manufacturing and machinery sectors, two pillars of the German economy. The construction sector also experienced a sharp decline, shrinking 3.8% due to rising interest rates and soaring construction costs.

On the other hand, household consumption rose marginally by 0.3% for the year, supported by increased spending on transport and health.

Challenges for Growth

Both structural and cyclical pressures have impeded Germany’s economic growth. Surging competition in key export markets has created challenges for the country’s export-driven economy. Additionally, higher energy costs and geopolitical uncertainties, including trade tensions and conflicts, have exacerbated economic vulnerabilities.

Outlook and Policy Implications

The persistent inflationary pressures and economic stagnation present a complex challenge for policymakers. While inflation remains above the ECB’s target, the broader economic slowdown may necessitate continued monetary and fiscal measures to support growth.

As Germany grapples with structural weaknesses and external risks, economic recovery will likely depend on addressing these challenges while maintaining consumer confidence and industrial competitiveness.

The future of Britain’s Sizewell C nuclear power project hangs in the balance after the French state auditor, Cour des Comptes, called on EDF to reconsider its commitment to the £40 billion (€47.42 billion) venture. The auditor has recommended EDF prioritize domestic nuclear projects over foreign investments, citing concerns about escalating costs and risks.

EDF’s Role and Financial Pressures

EDF, alongside the UK government, is a key backer of Sizewell C, with the government holding an 80% stake. The project, which began construction in January 2024, is now under scrutiny as EDF weighs its final investment decision. This comes against the backdrop of EDF’s costly involvement in Hinkley Point C, another UK nuclear project, which has faced delays and a ballooning budget.

Hinkley Point C, originally projected to cost significantly less, is now expected to require £45 billion (€53.3 billion), with operations delayed until after 2030. EDF has already written off €12.9 billion of its investment in the Somerset project, raising questions about its ability to support additional large-scale international projects like Sizewell C.

French Priorities

The Cour des Comptes has urged EDF to focus on ensuring the profitability and timely completion of domestic nuclear projects, which are central to bolstering France’s energy security. The auditor also advised the company to reduce its exposure to Hinkley Point C before committing further resources to Sizewell C.

Growing Opposition to Sizewell C

The Sizewell C project has faced mounting criticism, including environmental concerns and questions about its economic viability. Critics highlight the plant’s significant water requirements and the adequacy of its proposed sea defense systems, especially given climate-related challenges.

Anti-nuclear groups, including Together Against Sizewell C and Stop Sizewell C, have raised legal challenges over the project’s environmental impact. Concerns have been amplified by the allocation of £4 billion (€4.74 billion) of taxpayer funds toward the project, which activists argue is unjustifiable amid economic pressures.

Alison Downes, executive director of Stop Sizewell C, criticized the government’s continued support, stating, “Evidence is mounting that Sizewell C will be unaffordable and late. Ministers must come clean about its true cost. The continued secrecy around Sizewell C is inexcusable.”

Solicitor Rowan Smith, representing environmental campaigners, argued the project’s lack of a permanent water supply undermines its feasibility, noting that “Suffolk is in drought and has vulnerable habitats, which need to be protected.”

Uncertain Future

With EDF facing pressure to prioritize domestic interests and opposition to Sizewell C intensifying, the future of the project remains uncertain. Both EDF and Sizewell C representatives have yet to comment on the latest developments.