Blog: You, us, everyone

The shares of Richemont have underperformed peers significantly over the past five years. There are though a number company specific catalysts that could help shares rerate in the near term. They are centered around the: improved brand recognition. Therefore, we expect a narrowing discount with to the sector average, restructuring of watches division comes to an end, and  finally, the reduction in ownership of loss-making online activities which has heavily weighted on sentiment.

• Alike the sector peer group, Richemont has rebounded strongly from the peak of the COVID crisis, especially thanks to trends in China and the US where luxury spending has accelerated.
• Sales in the nine months ended 31 Dec 2021 surged by over 50% year-on-year.
• The company's financial profile is supported by exceptional liquidity and strong cash flow generation. Activists have taken an interest in the company, potentially calling for M&A which remains a risk given the sector's ongoing consolidation, albeit chairman Mr. Johann Rupert has repeatedly stated the company is not for sale nor interested in mergers.