Research archive for CFR

Last week Richemont released fresh quarterly numbers. It was a complete reversal of the previous set, three months ago. After November's numbers, the share price dropped 5% on fears that luxury spending was slowing. This time the share price popped over 10%!

On Friday, Richemont released a six-month trading update which did not meet market expectations, and the stock dropped by 5.4%. This fall was a bitter pill to swallow considering that the stock is already down by around a third from its recent highs.

Luxury goods sales have been very resilient over the last few years. The old adage is true - the rich do not feel inflation. We are lucky to have the second-biggest luxury goods group in the world listed on the JSE. The Richemont share price has tripled in the last three years. Some of that was a weaker Rand but most of it is from a strong underlying business.

On Friday Richemont released some great-looking numbers. Clearly the rich are not feeling the global inflation pinch. In SA the share price popped by 9% at one stage, but some of that was caused by the awfully weak Rand.

Richemont, the owner of brands like Cartier, Chloe, Van Cleef & Arpels, and Panerai reported higher quarterly revenue as tourists made a comeback in Europe and Japan, where sales increased 19% and 43%, respectively. However, China still needs to pull up its socks.

It is always nice for a company to release positive results on a day when the general market is surging. That's what happened to Richemont last week Friday and the stock closed up 13%. Group sales increased 24% for the 6 month period to 9.67 billion Euros while profits from continuing operations increased 40%.

French luxury brand Cartier is planning to expand its American retail footprint. As you know, Cartier belongs to Richemont. The upscale jewellery and watch-making company announced plans to open another 10 US stores in the coming years. ⁠ They currently have 30 US stores. This is a sign that European high-end labels are betting that American demand will remain robust post-Covid.

On Friday, Richemont posted a quarterly update that showed a 12% sales growth despite a brutal 37% drop in sales for Mainland China. That region is very significant for the company, achieving double-digit overall growth despite the drop in China is good going. There was 82% growth for Japan and 42% for Europe. The return of tourism has been a strong tailwind for luxury sales.

One of our longest-standing stock picks in JSE portfolios is luxury goods-maker Richemont. We like the top-end of the retail market, where the margins are wide and the customers are loyal.

Yesterday the Richemont share price soared 5%. It is great to see a stock move higher after all the red in the broader market. The luxury goods company showed a 38% sales increase for their latest quarter compared to the same quarter in 2019. We don't look at 2020 because, well, does it really count as a year?

Swiss luxury group Richemont is a core holding in JSE-share portfolios. As Michael pointed out here recently, the stock has been on a nice run to above R200 a share.

On Monday Richemont finally managed to break above R200 a share. It's been a hard slog after first breaking R100 a share in 2013. LVMH, by comparison, has managed to double in value over the last two years. Richemont, the jewel in the Rupert-family empire, is managed conservatively, which slows down their growth a bit, but that also ensures sustainability and longevity.

Richemont has been a solid performer on the JSE this year. Since November 2020, it's up over 60%. I'd say part of that success was their well-timed push into online retail.

Richemont has been an excellent performer on the JSE of late. In the last year it has gone from R100 a share to R170. When you look at the performance of their competitors like Louis Vuitton, you can see why. Luxury goods companies are enjoying a bumper year.

Yesterday Richemont almost broke R160 a share for the first time. It reached a high of R159.77. The share price has been very frustrating since 2013, bouncing between R100 and R120, so it is great to see it finally break out of that range. One of the main reasons for the company being range bound was that political gift giving was discouraged by officials in China, so gold watch sales took a knock. Once that had normalised, then the globe started to shift towards digital watches and away from traditional watches.