Richemont is an international luxury goods group which was created in 1988 through the spin-off of the international assets owned by Rembrandt Group Limited of South Africa. These assets included significant interests in the tobacco, financial services, alcoholic beverages, gold, diamond mining and luxury goods industries. Based in Switzerland, the group currently trades on the SIX Swiss Exchange and has a secondary listing on the Johannesburg Stock Exchange (JSE).

Today, Richemont is the second-largest luxury goods company in the world, with a particular strength in jewellery, watches, writing instruments and premium accessories. Prestigious names include Cartier, Piaget, Vacheron Constantin, Alfred Dunhill, Van Cleef & Arpels, Jaeger-LeCoultre, Panerai, Montblanc and IWC Schaffhausen.

Richemont has a considerable global reach across the Americas, Europe, Asia and South Africa. The group employs some 30 000 people worldwide and has a history of being on the JSE’s Top 40 Index.It is currently one of the JSE’s largest companies by market cap, at R479 billion, and Richemont share price has historically been strong.

Their companies’ (known as Maisons) products are for sale through a network of boutique shops owned by the group, franchise operations and boutiques owned by third parties.

Richemont has a truly global reach which gives it a long-term competitive advantage, as the group does not depend on one particular market. Richemont believes that the independence of each Maison is integral to their overall growth strategy. The group aims for long-term growth through investment in Maisons, ensuring high product quality and outstanding customer service, attracting creative management and skilled craftsmen, increasing manufacturing performance and adapting to changes in the economic environment.

Huge capital investments in state-of-the-art manufacturing and distribution facilities are now nearing conclusion, which should act as a significant driver of growth in the near future. For Richemont, the luxury goods sector has recorded weak performances recently due to the ailing global economy and an increasing unwillingness of consumers to purchase premium goods. The live online stocks chart shows that Richemont share price has taken a sharp dive in recent months, with investors reluctant to buy the shares.

As a rand hedge buy in the rarified luxury goods market, Richemont shares present a unique investment opportunity for South Africans.

Richemont share price is likely to be affected by the consumer’s willingness to buy luxury products in a time of economic slowdown. From June 2015 to June 2016, Richemont share prices dropped by more than 27%, and the sale of luxury goods is forecast to remain slow for the foreseeable future. Richemont does however have a strong brand visibility and a global footprint which will act to its advantage.

The consensus forecast amongst investment analysts advises that investors currently hold their position in the company. Investors who buy Richemont shares can only hope for significant improvement in the global economy if consumer demand for luxury goods is to increase.

Consumer Discretionary

Apparel & Textile Products

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