Billionaire Johann Rupert's Richemont posted its strongest year on record but China remains its biggest vulnerability

Johann Rupert's Richemont delivered one of the strongest annual performances in its history, posting revenue of €22.4 billion ($24.2 billion) for the year ended March 31, 2026, up 11 percent at constant exchange rates, with net profit surging 27 percent to €3.5 billion ($3.8 billion). The result surprised analysts who had expected record gold prices, US tariff uncertainty and softening consumer confidence to drag more heavily on the Swiss luxury group behind Cartier and Van Cleef and Arpels. Yet behind the headline, a structural vulnerability that Rupert and his management team cannot yet resolve remains clearly visible: the group's dependence on China, a market that is changing in ways that previous downturns have not prepared it for.

China and the broader Asia Pacific region remain Richemont's most important single geographic exposure. For much of the past decade, Chinese consumers drove between a quarter and a third of global luxury spending, and Richemont's jewelry and watch divisions were among the primary beneficiaries of that wave. The watch division, which includes IWC Schaffhausen, Jaeger-LeCoultre and Piaget alongside Cartier's timepieces, saw sales fall 13 percent in fiscal 2025 due specifically to lackluster demand in Asia Pacific, a region where China, Hong Kong and Macau combined were still contracting. The fiscal 2026 recovery in jewelry, where sales grew 14 percent and all regions posted double-digit growth with the exception of Asia Pacific, masked the watch division's continued weakness.

The structural concern extends beyond cyclical softness. A new competitive threat has emerged in the form of Laopu Gold, a Hong Kong-listed Chinese jewelry company whose sales of handmade, vintage-style gold pieces surged nearly 170 percent to 10 billion yuan ($1.4 billion) in a single year, propelling the company to a market capitalisation of $20 billion, making it the seventh-largest luxury group in the world by market value. Laopu markets directly to customers through its own stores, sells at fixed prices regardless of fluctuating gold costs, and produces pieces with more gold content per item than Western rivals, offering buyers a stronger value proposition in a market where conspicuous consumption has given way to more considered spending. Chinese consumers, unnerved by a property market still in distress and rising economic uncertainty, are increasingly choosing a domestic brand that offers investment-grade gold content over a European brand whose heritage premium is being questioned by nationalist sentiment.

LVMH's deputy chief executive Stéphane Bianchi told French lawmakers in May 2026 that Chinese customers are not only pulling back on luxury spending but actively shifting interest toward domestic brands. When Rupert was asked directly about Laopu, he said he absolutely respects them and watches them closely, but maintained that Cartier and Van Cleef and Arpels appeal universally and retain investment value at international auctions, a fundamentally different value proposition from domestic Chinese gold jewelry.

Bernstein analysts, who have named Richemont their top luxury pick for 2026, acknowledge the China exposure but project a progressive U-shaped recovery in the market rather than a sharp V-shaped rebound. That distinction matters for Rupert. A slow grind back means quarters of continued pressure on Asia Pacific metrics even as Americas and Middle East compensate. The Americas delivered a 14 percent sales rise in the most recent comparable quarter. The Middle East and Africa grew 20 percent. Those numbers are strong, but they are not yet large enough as a proportion of revenue to absorb a sustained China contraction without impact on the group's overall growth profile.

The balance sheet provides reassurance at least on the financial side. Richemont held a net cash position of €7.6 billion as of late 2025, giving it the firepower to invest in brand expansion, digital infrastructure and selective acquisitions without pressure from lenders. The exit of the loss-making online retailer Yoox Net-a-Porter, sold to Mytheresa, removed a structural drag on earnings and helped margins expand even as gold prices hit historic highs during the year, lifting manufacturing costs across the jewelry and watch categories.

Rupert, 74, who founded Richemont in 1988 as a spin-off from his family's Rembrandt Group and controls the company through a dual-class share structure that gives him a majority of voting rights despite a minority economic stake, has guided the group through multiple cycles over nearly four decades. He built its competitive position on the premise that true luxury, anchored in heritage, craftsmanship and pricing discipline, could survive any macroeconomic environment. That thesis has held through every previous China correction. The question now is whether a China that is actively choosing domestic alternatives, rather than simply spending less, represents a different kind of challenge from the ones Richemont has navigated before.