- Annual sales and profits hit new highs
- Richemont delivers double-digit growth across all regions in Q4
- Resumption of Chinese travel to boost demand
Posh watches retailer Compagnie Financière Richemont (CFR:SWX), typically just called Richemont, is trading at all-time highs of ₣158.4 (Swiss francs) after forecast-beating fourth quarter sales saw the stock jump 6%.
In common with rivals, such as LVMH (LVMH:BIT), Kering (KER:EPA) and Hermes (RMS:EPA), the Cartier-to-Montblanc brands-owner can’t seem to sate the appetite of well-heeled Chinese consumers for bling.
The extraordinary boom in luxury goods sales is being bolstered with a rapid reopening of the world’s second biggest economy.
RECORD SALES AND PROFITS
Richemont’s sales and operating profits rose by a better-than-expected 19% and 34% respectively to all-time highs of €20 billion and €5 billion in the year to 31 March 2023.
The operating margin expanded to 25.2% and Richemont’s core jewellery division, home to Cartier and Van Cleef & Arpels, drove profitability with a margin just shy of 35%.
Encouragingly, Richemont recorded a ‘significant sales increase’ in the final quarter as Asia Pacific revenues resumed growth following the removal of travel and health restrictions in mainland China.
The world’s third largest luxury goods maker, behind LVMH and Birkin bag maker Hermes, Richemont delivered a 25% fourth quarter sales surge to the best part of €2.3 billion in Asia Pacific, its biggest region by revenue. Fourth quarter sales also shot up in Europe, the Americas, Middle East & Africa and in Japan, growing by 21%, 12%, 20% and 36% respectively.
BUMPER DIVIDENDS FOR SHAREHOLDERS
Chairman Johann Rupert, the South African businessman who founded Richemont in 1988, warned that ‘economic volatility and political uncertainty look set to remain features of the trading environment’.
As such, his charge will therefore ‘seek to maintain the necessary agility to manage fluctuating levels of demand’.
Nevertheless, Rupert is ‘confident that our Maisons are well positioned to meet strong demand, notably driven by a significant resumption of Chinese travel. Richemont is fortunate to own such a unique portfolio of Maisons with excellent long-term prospects.’
And having closed the year with €6.5 billion of net cash in the coffers, Richemont demonstrated confidence in its prospects by raising the annual dividend by 11% to ₣2.5 per each ‘A’ share and 10 ‘B’ shares respectively. The company also announced a special one-off payout ₣1 per ‘A’ share and 10 ‘B’ shares.
