The yen-driven consumption frenzy in Japan's luxury market has finally subsided, dealing a blow to Cartier owner Richemont's sales performance. The Swiss luxury conglomerate reported a 15% year-on-year decline in Japanese market sales at constant exchange rates during its first fiscal quarter ending June 30, according to Wednesday's earnings release.

This sharp reversal comes after last year's exceptional 59% sales surge in Japan, fueled by yen depreciation that turbocharged tourist spending and luxury consumption. The Japanese currency began its sustained depreciation trend in March 2024 when the Bank of Japan exited its negative interest rate policy and abandoned yield curve control. By June 2024, the yen had plunged to a 38-year low against the dollar, breaching the critical ¥161 threshold.

Richemont reaped continuous benefits from the weak yen throughout fiscal 2024, with Japanese sales consistently growing 20-25% quarter after quarter. The phenomenon extended beyond Richemont, with industry titans including LVMH, Kering, and Burberry all capitalizing on the trend.

The yen's recent strength during early 2025 abruptly halted this momentum. "In Japan, sales declined by 15% against a demanding comparison base of +59% in the prior year period," Richemont stated. "The stronger yen significantly reduced tourist spending, although local demand remained positive."

Despite the broader luxury sector slowdown, Richemont emerged as a rare outperformer as affluent consumers sustained robust demand for its high-end jewelry. The Geneva-based group posted a 6% constant-currency revenue increase to €5.41 billion (approximately $6.28 billion) for the April-June quarter, narrowly exceeding analyst projections of €5.37 billion.