Compagnie Financiere Richmont SA JSE: CFR

Compagnie Financier Richmont shares

Background of Compagnie Financière Richemont

  • Richemont was created in 1988 through the international assets owned by Rembrandt Group Limited of South Africa (now known as Remgro Limited). Established by Dr Anton Rupert in the 1940s, Rembrandt Group owned significant interests in the tobacco, financial services, wines and spirits, gold and diamond mining industries as well as the luxury goods investments that, along with the investment in Rothmans International, would form Richemont.

  • Compagnie Financière Richemont South Africa owns some of the world’s most prestigious luxury goods, each of which has a proud history and heritage of craftsmanship and design. More recent acquisitions include businesses which combine unique design with traditional skills.

  • Compagnie Financière Richemont SA engages in the luxury goods business in Europe, the Middle East and Africa, Asia, and the Americas. It operates through jewellery Maisons, specialist watchmakers, and other segments. The company designs, manufactures, and distributes jewellery products; and precision timepieces, watches, writing instruments, and accessories. The company also offers its products through owned boutiques and online stores. Compagnie Financière Richemont SA was founded in 1988 and is headquartered in Bellevue, Switzerland.

  • The Group’ s luxury goods interests encompass some of the most prestigious names in the industry, including Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, and Montblanc.

  • Founded in 1847, Cartier is not only one of the most established names in the world of Jewellery and Watches, it is also the reference of true and timeless luxury.

  • Created in 1906, Van Cleef & Arpels is a High Jewellery Maison based on the values of creation, transmission and expertise.

  • Giampiero Bodino is a signature High Jewellery Maison hinged on the highest form of creativity inspired by the Italian culture and arts.

  • A. Lange & Söhne creates outstanding hand-finished mechanical watches with “challenging complications that follow a clear and classical design line”.

  • Since 1830, Baume & Mercier has been creating watches of high quality that carry a classic and timeless aesthetic.

  • Another designer timepiece on Richemont’ s roster is IWC Schaffhausen which has been crafting timepieces since 1868.

Compagnie Financière Richemont Shares Growth Driver

  • The growth in group sales was driven by a number of factors including geographic spread, the mix of sales by product type and by distribution channel. Sales growth has also been derived from the acquisition of new businesses.

  • The Group’ s products themselves are said to be Richemont’s driver of growth.

  • Cartier has successfully managed over the years to establish itself as a leader not only in jewellery but as a global luxury Maison. For many years, it has been developing its manufacturing and craftsmanship investment plan.

  • Several new boutiques were opened during the year, including Shin Kong Place in Beijing and Iguatemi in São Paolo, then to Castlereagh Street in Sydney and Brisbane in Australia. In May 2015, the Champs-Elysées flagship boutique was reopened following refurbishment.

  • To complement and support the appeal of its boutiques, Cartier continues to develop an e-commerce network. This digital experience answers clients’ higher expectations for service, accessibility and performance through 19 mobile versions of Cartier sites all over the world, including China.

  • With a network of 117 boutiques, Van Cleef & Arpels has established itself worldwide, with the ambition to build a well-balanced business both geographically and between nationalities. In the past year, it opened nine new boutiques, expanding to new cities such as Rome and Bangkok.

  • After participating in the ‘ Biennale de Paris’ last year, widely celebrated by worldwide media, Giampiero Bodino embarked on a first international tour covering Paris, Hong Kong, Geneva, and London to present its creations to a selected group of high jewellery connoisseurs.

  • Since its refoundation in 1990, the A. Lange & Söhne brand has developed 54 different in-house calibres, each revealing its unmistakable origins in high-precision Lange pocket watches. During the year, A. Lange & Söhne received nine international awards. After participating in the ‘ Biennale de Paris’ last year, widely celebrated by worldwide media, Giampiero Bodino embarked on a first international tour covering Paris, Hong Kong, Geneva, and London to present its creations to a selected group of high jewellery connoisseurs.

  • The focal point of Richemont’s year was the launch of the Pilot’ s Watch collection at the Salon International de la Haute Horlogerie in Geneva in January 2016.

  • The launch was celebrated with a revue-style show in the presence of many IWC brand ambassadors and celebrities. At the third Watches & Wonders exhibition in Hong Kong in September, IWC Schaffhausen introduced new models from the Portofino collection including the Portofino Hand-Wound Monopusher.

  • In addition, the focus was on the relaunched Portugieser collection. During the past year, we underlined our passion for cinema by debuting as an official partner of the Singapore International Film Festival.

Compagnie Financière Richemont Investor Tip

  • The 6% increase in sales at actual exchange rates, or 1% decrease at constant exchange rates, reflected growth in jewellery, leather goods and clothing for Richemont’ s share price and shareholders. Regionally, demand grew in Europe, the Middle East, Americas and Japan. The retail channel saw better performance better than the wholesale channel, although sales through both channels remained volatile. The volatility was highlighted by the contrasted first and second half of the year under review for all regions and channels.

  • Operating expenses increased by 14% for the Johannesburg Stock Exchange (JSE) listed company during the year amid adverse exchange rate effects, this had an obvious effect on Richemont’ s share price, compared to the 13% increase in purchases through Richemont’ s own boutiques.

  • Live data suggests that selling and distribution expenses were 16% higher, including depreciation charges linked to the opening of new boutiques in the prior year as well as higher fixed rental costs.

  • Communication expenses rose by 8% and continued to represent between 9% and 10% of sales.

  • Gross profit increased by 4%. The gross margin percentage was 180 basis points lower at 64.3% of sales. The significant increase in the value of the Swiss franc versus other currencies, which followed the Swiss National Bank’ s decision in January 2015 to remove the euro/Swiss franc ‘ peg’ , had a negative impact on the cost of sales throughout the year under review. Which alerted Richemont shareholders, with the possibility of putting their shares up for sale.

  • The gross margin was also negatively impacted by lower capacity utilisation and one-time charges of € 67 million related to various Maisons and manufacturing facilities in Switzerland.

Compagnie Financière Richemont Major Shareholders

  • Sector

    Consumer Discretionary

  • Industry

    Consumer Durables & Apparel

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