Richemont (CFR) is the world's second-largest supplier of luxury goods, controlled by the Rupert family in Stellenbosch. Its sales are entirely located overseas, making it an excellent rand-hedge. The company’s luxury brands include Mont Blanc, Cartier, Lancel, Jaeger-LeCoultre, Van Cleef, and Piaget. Richemont has boosted online sales to 21% of turnover by acquiring Yoox-Net-A-Porter (YNAP), Watchfinder, a UK online group, and entering into a joint venture with the online giant Alibaba. This joint venture aims to develop apps to penetrate the Chinese market and offer its line of luxury goods through Alibaba's Tmall Luxury Pavilion.
Richemont is directly linked to the recovery of the world economy following the pandemic. While the company's sales clearly took a hit from COVID-19, they are expected to continue rising, especially now that it is aggressively offering its products online. This share is also impacted by the slowdown in the Chinese economy and the developments in Central and Eastern Europe. It will benefit from the recovery in the world economy but will be impacted by changes in the strength of the rand.
In its results for the year to 31st March 2024, the company reported sales up 3% and 8% in constant currencies. Headline earnings per "A" share fell by 4%. The company said, "Jewellery Maisons delivering a 33.1% operating margin, with sales up 6% at actual exchange rates (+12% at constant exchange rates). Strong net cash position of EUR 7.4 billion, with a solid increase in cash flow generated from operating activities to EUR 4.7 billion."
In an update on the first quarter to 30th June 2024, the company reported sales up 1% in constant currencies and, "Mid-single digit growth at the Jewellery Maisons and the Group's 'Other' business area (which includes the Group's Fashion & Accessories Maisons) offsetting lower sales at the Specialist Watchmakers impacted by strong exposure to Asia Pacific."
This share made an "island" formation in October and November of 2023 before beginning a new upward trend. It is clearly a rand hedge, but it is dependent on the Chinese consumer. We expect it to perform well, but on a P/E of 21,57 it is not cheap.
Richemont is directly linked to the recovery of the world economy following the pandemic. While the company's sales clearly took a hit from COVID-19, they are expected to continue rising, especially now that it is aggressively offering its products online. This share is also impacted by the slowdown in the Chinese economy and the developments in Central and Eastern Europe. It will benefit from the recovery in the world economy but will be impacted by changes in the strength of the rand.
In its results for the year to 31st March 2024, the company reported sales up 3% and 8% in constant currencies. Headline earnings per "A" share fell by 4%. The company said, "Jewellery Maisons delivering a 33.1% operating margin, with sales up 6% at actual exchange rates (+12% at constant exchange rates). Strong net cash position of EUR 7.4 billion, with a solid increase in cash flow generated from operating activities to EUR 4.7 billion."
In an update on the first quarter to 30th June 2024, the company reported sales up 1% in constant currencies and, "Mid-single digit growth at the Jewellery Maisons and the Group's 'Other' business area (which includes the Group's Fashion & Accessories Maisons) offsetting lower sales at the Specialist Watchmakers impacted by strong exposure to Asia Pacific."
This share made an "island" formation in October and November of 2023 before beginning a new upward trend. It is clearly a rand hedge, but it is dependent on the Chinese consumer. We expect it to perform well, but on a P/E of 21,57 it is not cheap.
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