Richemont shares: Price analysis before buying or selling

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ISIN code: CH0210483332

Ticker: JSE: CFR

Index or market: SMI

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Elements to consider before selling or buying Richemont shares

Analysis N°1

First of all, with regard to opportunities, economic spinoffs of the joint venture created with the Polo Ralph Lauren brand are expected.

Analysis N°2

You should also monitor companies that are subsidies of Richemont like the Mont Blanc brand which should continue to gain notoriety and profitability.

Analysis N°3

Finally, the Richemont group could soon increase its efforts to position itself in emerging markets. This objective is obviously one of the priorities of the company for the years to come.

Analysis N°4

With regard to the threats that may weigh on the future of Richemont, there is the increasingly important competition, particularly from the LVMH group, which is banking on its brand image to differentiate itself and gain market share. In response to this aggressive competition, Richemont will have to invest in the promotion of its brand even more in order to maintain its image with the public.

Analysis N°5

Finally, like its competitors, Richemont must find solutions to fight the increasing counterfeit market in the luxury sector, which represents significant losses for the group and can harm its image.

Analysis before buying or selling Richemont shares

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General presentation of Richemont

To understand how the Richemont group is capable of evolving in the months and years to come and thus how its shares may perform on the stock market, it is essential to know this company and its activities well. This is what we are proposing now with a complete presentation of this company:

The Richemont Group or Compagnie Financière Richemont SA is a Swiss company specialising in the luxury sector. More precisely, it is one of the leading manufacturers of luxury goods in the world today.

To better understand the activities of the Richemont Group, it is possible to divide them into different divisions according to the share of turnover they generate and in this way:

Jewellery items are the most important of the group and alone account for over 42.2% of the group's turnover. This includes the Cartier brand, which is the world's number one in jewellery, but also the Van Vleef & Arpels and Giampiero Bodino brands.
Next are luxury watches, which generate 31.1% of the company's turnover with the brands Piaget, A.Lange & Söhne, Jaeger-LeCoutre, Vacheron Constantin, Officine Panerai, IWC Shaffhausen, Baume & Mercier and Roger Dubuis.
Finally, the remaining 26.7% of sales came from other products, including pens, leather goods and clothing under the Montblanc, Chloé, Old England, Purdey and Alfred Dunhill brands.

Retail distribution accounts for 55.1% of the group's turnover, wholesale distribution 23.6% and online distribution 21.3%.

Geographically, the group currently generates 1.9% of its turnover in Switzerland, 3.4% in the UK, 17.2% in the rest of Europe, 33.2% in China, 7.2% in Japan, 12% in Asia, 16.2% in the USA, 1.9% in the Americas and 7% in the Middle East and Africa.

The major competitors of Richemont

The Richemont group is of course not the only one in its sector to covet the luxury market. It has to face several serious competitors, of which we propose to give you a complete presentation here:

LVMH

First of all, the LVMH group is a French group of luxury companies which is among the leaders and the largest in terms of turnover. It was formed by the merger in 1987 of Moët Hennessy and Louis Vuitton. The group owns and operates a portfolio of more than 70 prestige brands in various segments including wines and spirits, fashion and jewellery. It is also active in media and luxury hotels.

Kering

Another direct competitor of Richemont is of course the Kering group, formerly known as Etablissements Pinault, then Pinault-Printemps-Redoute or PPR. It is a French luxury group that owns and operates several major brands including Gucci, Yves Saint-Laurent, Bottega Veneta, Balenciaga, Boucheron and Alexander McQueen and Kering Eyewear which is a joint venture with Richemont in eyewear frames. The group was created in 1962 by François Pinault, who allowed it to be listed on the stock exchange in 1988. It then joined the CAC 40 stock market index in 1995 and made a shift towards luxury by buying Gucci and Yves Saint-Laurent in 1999, leaving its historical activities behind.

Luxottica

Still among Richemont's competitors, we find the Italian group Luxottica, which is the world's leading manufacturer and distributor of spectacle frames. It is part of the EssilorLuxottica group since its merger in 2018 with Essilor International.

Hermès

Finally, the Hermès Paris group, formerly known as Hermès International or Hermès is a French company specialising in the design, manufacture and sale of luxury products in various fields of activity including leather goods, ready-to-wear, perfumery, watches, homeware, lifestyle and tableware. The group was founded in 1837 in Paris by Thierry Hermès as a harness and saddle manufacturer. Today, the company is still owned by the family of heirs. The personal fortune of the Hermès family is estimated at 39,600 million euros.

The major partners of Richemont

To close this article, check out the main partnerships established by Richemont in recent years.

Ralph Lauren

In 2008, Richemont and Ralph Lauren formed a joint venture to design, develop and produce watches and jewellery for Ralph Lauren boutiques and independent watch and jewellery retailers.

Chow Tai Fook

In 2013, the Richemont group entered into a partnership with the Chinese group Chow Tai Fook and created a joint venture which distributes the Baume & Mercier brands in China.

Yoox

In 2015, Richemont also linked up with Yoox as part of the creation of a 50/50 joint venture for an e-commerce platform Net-a-Porter.

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The factors in favour of a rise in the Richemont share price:

First of all, an undeniable strong point is the company's ability to offer and market a wide variety of products including jewellery, watchmaking, high-end accessories such as writing instruments along with fashion and leather goods. As a result, the group can protect itself from sectoral crises more effectively.

Stock market investors also appreciate Richemont's positioning on the Swiss stock market. Richemont is one of the largest stocks in the Swiss index in terms of capitalization, which gives it certain stability and high volatility.

The Richemont group also benefits from a very interesting positioning in its sector of activity and in the world. In fact, it’s the second largest company in the luxury sector internationally and in terms of turnover.

Richemont can also count on some of its segments which are among the most profitable at the present time and the most stable over time with firm resistance regarding the crisis such as jewellery, luxury watches or writing instruments.

The group can rely on a large workforce since it currently employs over 20,000 people, mainly in Europe but also in the rest of the world.

Finally, Richemont has the advantage of owning many popular and prestigious brands such as Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCouture, IWC and even Panerai.

The factors in favour of a drop in the Richemont share price:

First and foremost, in order to sell its merchandise, the Richemont group is obliged to promote its products aggressively, which of course represents significant expenses. The same goes for the marketing of these products which is done through many intermediaries with high margins.

Finally, the second and last weakness of the Richemont Company is its geographical and international positioning. Despite the successful establishment of its luxury brands in most countries of the world, Richemont is still struggling to find a place in emerging markets such as India and China. As a result, it is losing significant market shares to the competition which has succeeded in attracting these new luxury customers.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What is Richemont's positioning on the stock market?

It is interesting to know how the Richemont group positions itself in its sector of activity and on the stock market before taking any position in this stock. We know that the Richemont group is currently the world number two in the luxury sector in terms of turnover and that is positioned just behind the LVMH Company. The company is also the eighth market capitalization on the Swiss Market Index, which is the Swiss benchmark.

When was the Richemont Company created?

The Richemont Company was created in 1988 when the Rupert family separated their foreign assets from their South African assets in an attempt to avoid international sanctions that could hit the apartheid regime. Richemont then got involved in the Cartier Monde SA Company and Rothmans International with minority stakes, which enabled it to obtain stakes in Alfred Dunhill, Montblanc and Chloé.

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Analysis before buying or selling Richemont shares