Clear words are rare on the stock exchange. The shares of the luxury goods company Richemont suffer a severe setback.
Richemont patron Johann Rupert is usually not at a loss for clear words.
The busy billionaire and entrepreneur Johann Rupert is known for speaking plain language. One of his quirks is rebuking analysts and journalists who pester the Richemont chairman with uncomfortable or, in Rupert’s eyes, “stupid” questions. “Why do you always have to look for errors?” Was one of his humorous answers at this year’s group conference call. Or: “Are you actually trying to politicize our financial report?” he replied when asked why the press text was talking about a “tragic conflict” in Ukraine and not about a Russian war of aggression.
Impressive recovery after Corona
Rupert would have every reason to be happy. “His” luxury goods group Richemont, which sells prestigious brands such as Cartier, IWC and Piaget, increased sales by almost 50 percent to 19.2 billion euros in the fiscal year ended March. Operating profit has more than doubled and the group is also in good shape in terms of profitability, cash and cash flow. However, the Geneva luxury goods company is not immune to the fragile economic development.
Several months ago, Richemont stopped deliveries to Russia and closed the shops there because of the war. The costs for this amount to 168 million euros. However, the withdrawal should hardly cause any pain for the watch manufacturer: the Russian business accounts for less than 2 percent of the group turnover. The lockdown in Chinese cities like Shanghai, which weighed on business in the last quarter, is significantly more significant. About 40 percent of brand stores in China, Richemont’s largest market, are currently closed.
Feel-good market luxury under threat
With his blunt statements, Rupert gave shareholders another fright on Friday: The global environment is more uncertain than it has been for years, said the 71-year-old South African. The China business will suffer longer “than most think,” he added. He also warned that inflation would lead to further social polarization in some countries. This could dampen the “feel good factor” that underlies luxury consumption.
Such frank words are rather rare on the financial markets. The pessimistic forecast hit the titles hard. Even a generous special dividend from Richemont failed to appease investors: the shares fell by almost 12 percent on Friday.