By Carol Ryan

American shoppers seem to be snapping up luxury again, but investors should still shop carefully.

Shares in Europe's luxury industry rose across the board Thursday after Richemont reported far better-than-expected quarterly earnings. The Cartier owner said sales rose a tenth in the three months through December from a year earlier. The company's already ample net cash position swelled further.

Richemont's jewelry division had a standout Christmas, especially in the U.S, where record stock market valuations, the strong dollar and a solid labor market appear to have boosted luxury consumers' confidence after a shaky couple of years.

Sales of Richemont's jewelry brands were strong across all price points, which range from $1,000 for an entry-level product to hundreds of thousands of dollars for the most high-end pieces by Cartier and Van Cleef & Arpels.

Investors are excited the U.S. luxury market might be entering another gilded age. The timing couldn't be better as China is still in the doldrums.

But not everyone will benefit automatically. Weak labels such as Burberry, Gucci owner Kering and Salvatore Ferragamo still have a problem with lackluster products that need revamping. They are also more exposed to aspirational shoppers than Richemont, which mainly caters to the super wealthy.

A handful of luxury brands have exposure to jewelry: Richemont's performance is a good sign for LVMH, which owns both Bulgari and Tiffany & Co. But it won't be clear until other brands report whether handbags and apparel are also in recovery mode.

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(END) Dow Jones Newswires

January 16, 2025 10:09 ET (15:09 GMT)

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