The portfolio math behind the sale

Richemont closed its financial year to March 31, 2026, with a result that explains every strategic move the group is now making. Group sales reached 22.4 billion euros, up 5% in reported euros and 11% at constant exchange rates, with operating profit of 4.5 billion. The composition is the story. The jewellery maisons, Cartier, Van Cleef and Arpels, Buccellati and Vhernier, generated 16.5 billion euros, roughly three-quarters of group revenue, at a 30.5% operating margin. No watch division in the portfolio comes close to that profitability.

The Specialist Watchmakers division, which houses A. Lange and Sohne, Jaeger-LeCoultre, Vacheron Constantin, IWC and others, posted 3.1 billion euros, down 4% at actual rates but up modestly at constant rates after a difficult 24-month stretch. The group flagged sequential improvement in the second half, led by Lange, Jaeger-LeCoultre and Vacheron. Counting Cartier's timepieces, watches across the whole group still accounted for about 7.16 billion euros, or 32% of sales. The profit, however, is increasingly a jewellery story, and management is allocating accordingly.

Baume and Mercier goes to Damiani

The clearest expression of that allocation is the decision to sell Baume and Mercier. Richemont and Italy's Damiani Group signed an agreement in January 2026 for Damiani to acquire full ownership of the watchmaker in a private transaction, with closing expected this summer. Richemont will provide operational services to the brand for at least 12 months after the handoff to ease the transition.

The logic is straightforward. Baume and Mercier is a loss-making entry-level watch brand in a portfolio whose profit engine is high-margin jewellery. Divesting it removes a drag, frees management attention, and hands the brand to a specialist jeweller that believes it can run it better. For Damiani, an Italian house with its own jewellery heritage, the acquisition adds Swiss watchmaking capacity and a recognized name at the accessible end of the market. The transaction is small in revenue terms but clean in strategic terms for both sides.

Context on Damiani helps. The group is a family-controlled Italian jeweller with a portfolio that already spans several jewellery names, and adding a Swiss watch brand gives it a manufacturing foothold it did not previously own. Whether it can return Baume and Mercier to profit where a far larger Richemont could not is the open test, but the price of trying was clearly one Richemont was happy to accept.

A pattern, not a one-off

The sale is part of a broader reshaping running across the industry. The majors are concentrating on what earns, trimming what does not, and the diamond and jewellery side is where the capital is moving. Anglo American is pressing to exit De Beers after realizing just 101 dollars a carat on rough in the first quarter, down 19%, a process I track in this week's jewelry report. Signet has been closing roughly 100 stores and folding banners. Pandora reshuffled its North American leadership. The common thread is discipline: portfolios are being pruned toward the segments with real margin and real demand.

Richemont's numbers make the case better than any strategy memo. A 30.5% operating margin in jewellery against a watch division that spent two years contracting is the entire argument for the Baume and Mercier sale in one comparison. The group is not abandoning watchmaking; it is keeping the maisons that command pricing power and shedding the one that does not.

What it signals

For the trade, the read-through is about where the luxury groups will spend and where they will cut over the next several years. Jewellery counters that throw off 30% margins will get investment, marketing and shelf space. Entry-level watch brands without allocation discipline or pricing power are exposed. The wider cross-asset context is in this week's trade wrap. The question the Damiani deal raises is whether any conglomerate-owned entry-level watch brand is safe, or whether the next two years bring more of these handoffs to specialists who can run a single name harder than a 20-brand group ever will.