In a world of opulence, where brilliance and sophistication dance hand in hand, craftsmanship and artistry intertwine, and luxury reigns supreme, Compagnie Financière Richemont (JSE: CFR), a Swiss-based conglomerate known for its iconic brands, saw its sales skyrocket to dizzying heights, reaching remarkable records. From the revered Cartier, with its breathtaking jewellery and timeless timepieces, to the exquisite craftsmanship of A. Lange & Söhne, Jaeger-LeCoultre, and Van Cleef & Arpels, Richemont’s portfolio reads like a who’s who of the luxury world.
Richemont’s Share Price Spectacle
Richemont is no stranger to success, from record-breaking sales to a soaring share price. Given its impressive share price performance, its shareholders have enjoyed a recent ride to new heights, with a staggering 180% cumulative return over the last five-year period. As the chart below shows, Hermès (EPA: RMS) has outperformed its peers on a five-year historical basis, returning well over 230% to shareholders (orange line). LVMH Moët Hennessy (EPA: MC) has returned over 200% (blue line) to shareholders, while Richemont follows closely. Kering (EPA: KER), the owner of world-renowned brands such as Balenciaga, Gucci, and Bottega Veneta, has not enjoyed the same success as its industry peers, returning a measly 10% to shareholders over the previous five years (yellow line).
Over the last one-year period, Richemont has seen its share price nearly double, returning close to 100% to shareholders (green line), while Hermès (EPA: RMS) follows closely with a staggering 91% over the most recent twelve months (orange line). LVMH Moët Hennessy (EPA: MC) lags slightly behind some of its peers, returning just over 55% to shareholders over the last year (blue line), while Kering has returned just over 20% (yellow line).
Fundamental Analysis:
Richemont’s unrivalled financial prowess has catapulted the luxury brands conglomerate to new heights of success over the past year. With a brilliant display of strategic genius, the Switzerland-based luxury goods holding company leaves a trail of jaw-dropping numbers in their wake, with financial performance nothing short of extraordinary. Like a finely tuned symphony, Richemont orchestrated a masterpiece of profitability, recording staggering revenue figures that danced to the tune of record-breaking success in the company’s latest annual financial statements.
Group sales surged to an all-time high of €19 953 million for the financial year that ended 31 March 2023, representing a stellar 19% year-over-year increase in the group’s top line from €16 748 million in the prior year. Similarly, the luxury goods holding company reported an impressive 34% year-over-year rise in operating profit, from €3 753 million in 2022 to €5 031 million in 2023, its highest recorded figure yet. Profit for the year from continuing operations soared to €3 911 million for the 2023 financial year-end, marking a 60% year-over-year increase from the 2022 figure of €2 449 million. Paving the way to positive sentiment and investor delight, Richemont boasted an exemplary 78% year-over-year increase in its headline earnings per ‘A’ share, coming in at €6.69 per share, significantly up from the prior year’s figure of €3.76 per share.
Much to the jubilation of dividend-conscious shareholders, Richemont posted an 11% year-over-year increase in its dividend per ‘A’ share, coming in at CHF 2.50 per share for the 2023 financial year, up from CHF 2.25 per share for the prior year. Shareholders and investors alike will also be delighted to see Richemont’s net cash position strengthen to €6 549 million for the latest financial year, representing a €1 298 million increase from the prior year’s figure.
Delving into the enchanting world of Richemont’s prestigious Jewellery Maisons, this extraordinary segment, adorned by the illustrious Buccellati, Cartier, and Van Cleef & Arpels brands, saw a symphony of success unfold as sales surged by a staggering 21%, reaching an awe-inspiring €13.4 billion, equivalent to a jaw-dropping ZAR281 billion. With their exquisite timepieces, the Specialist Watchmakers added their magic touch to the equation, boasting an impressive 13% growth and contributing €3.9 billion to the figures. Not forgetting the captivating allure of Richemont’s “Other” business segment, the Fashion and Accessories Maison triumphed with an impressive 19% surge, resulting in eye-opening sales of €2.7 billion. Johann Rupert, chairman of Richemont, said, “Richemont is fortunate to own such a unique portfolio of Maisons with excellent long-term prospects.”
Technical Analysis:
Looking at the weekly time frame for Richemont, it is clear that 2023 has been a phenomenal year for the Switzerland-based luxury goods holding company, with its share price returning approximately 50% year-to-date. Shattering sales records and igniting a share price surge to stratospheric heights have paved the way to positive market sentiment and soaring investor confidence.
Should positive sentiment around Richemont persist, bullish investors could possibly see the share price increase and continue its impressive rally toward higher levels. If the recent bullish rally loses momentum amidst a change in market sentiment, the bears could see the price action on Richemont retrace and possibly decline toward the R2,841.79 level, which could be the first support level for the bears. Should the ZAR2,841.79 support level fail to hold, the bears could see the price action of Richemont decline to lower support levels.
Summary:
Richemont’s share price has surged to new highs amidst record revenue, paving the path to positive market sentiment. Bullish investors will be looking for a continuation of the recent rally. In contrast, the bears will look for a potential retracement toward lower levels, with the ZAR2,841.79 support level potentially attracting significant interest. Lower support levels include ZAR2,470.91, ZAR2,010.12, and the primary support level at ZAR1,487.52 (red line).
Sources: Compagnie Financière Richemont, Moneyweb, Trading View
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