The stock of Johan Rupert’s luxury group Richemont rose to a record high on Friday, as it doubled its annual dividend after a strong recovery in the fourth quarter to end-March.
The share price of the company — that specialises in high-end jewellery, perfume, watches and fashion — hit an intraday best level of R157.01 on Friday, eventually closing 4.76% firmer at a record R154.17.
Richemont is paying a dividend of Sf2 (R30.93) per share, after cutting it in 2020 as the pandemic spread across the world.
The company, with a market cap of R804bn, has a listing on the Swiss Stock Exchange with a secondary listing on the JSE. It is the second-largest luxury goods company in the world after LVMH.
Richemont’s annual results to end-March exceeded investor expectations, as luxury brand sales made a comeback on Chinese demand, a spike in Cartier, Van Cleef & Arpels jewellery sales and growing online demand.
Sales fell in the first quarter due to the Covid-19 pandemic, reduced travel and plummeting retail sales at airports.
Jewellery sales, however, grew beyond pre-Covid levels with double-digit sales growth in the second half of the year.
“Strong performance in mainland China is contributing to 19% sales growth in Asia Pacific, where year-on-year sales rose by triple-digits in the fourth quarter,” the group said in a statement.
Online sales now account for 21% of its sales.
Richemont was initially reticent about moving online as it did not want to damage its exclusivity and brand appeal. But it partnered with online Chinese retailer Alibaba in 2018 opening 11 stores on the online luxury platform — selling different brands including IWC Schaffhausen, Piaget, Chloé, Dunhill and Montblanc.
Chinese consumers are expected to make up the largest market for luxury goods in the world by 2025, according to a report by Bain.
Richemont said online consumers want to do more than purchase online. “Clients also want a more personalised touch, styling advice, curation and access to the voices behind the brand, far from the catalogue approach offered by some platforms.”
Operating margin improved to 11.2% and profit for the year increased 38% to €1.2bn (R20bn) as the Asian demand made up for a drop in sales in the first half of the year and revenue was only down 5%.
Richemont said there was a significant increase in the net cash position to €3.3bn.
Update: May 21 2021
This story has been updated with Richemont’s closing share price and market cap on the JSE.
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