Morningstar

Richemont: Sales Strong, Helped by Recovery in Asia, as Sales in Americas Muted

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Securities In This Article
Compagnie Financiere Richemont SA Class A
(CFR)

We are maintaining our fair value estimate of CHF 140 per share for wide-moat Richemont CFR as the company reported solid growth in the first fiscal quarter led by the Asia-Pacific region.

Sales increased by 19% at constant exchange rates, with 40% growth in the Asia-Pacific region on a low comparison basis, as last year’s first quarter was affected by lockdowns in China (sales in Asia-Pacific down 15% in first quarter 2022/2023). Sales in Europe were up 11%, helped by still solid local and tourist demand, and increased by midteens in Japan and the Middle East and Africa. Americas was the only region where sales were down (down 2%) supporting our view of deceleration in this market after two years of unusually strong growth helped by a number of nonrecurring tailwinds.

Jewellery Maisons performed the strongest, up 24% at constant currencies, which should bode positively for the profitability of the group (Jewellery Maisons is the most profitable division). Specialist watchmaker sales were up 10%. Retail channels also continued outperforming, with 24% constant-currency growth. Direct to consumer sales now represent 74% of revenue, supporting brand intangible moat source in our view through better control over pricing and customer experience. Remarkably, retail and online sales amounted to 60% of specialist watchmaker sales, traditionally wholesale-driven businesses. We believe a higher share of retail sales could help avoid overcapacity and grey market headwinds that the company went through in 2015-2020, making the group more resilient.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Jelena Sokolova, CFA

Senior Equity Analyst
More from Author

Jelena Sokolova, CFA, is a senior equity analyst, Europe, for Morningstar*. She covers the consumer discretionary/luxury goods sector. She is a lead analyst for the sector, performing in-depth fundamental analysis and DCF modeling resulting in investment ideas tailored to long-term investors and analyzing the durability of company competitive advantages based on Morningstar proprietary “moat” methodology. Since 2023 she is a member of the Moat Committee, assessing competitive strengths across sectors.

Before joining Morningstar in 2016, Sokolova worked as a senior equity analyst at CE Asset Management in Zurich covering European large caps. Having started as an analyst for CE Asset Management office in Riga in 2010, Sokolova got promoted to a Senior Analyst position in 2013 covering European Large cap stocks with a generalist focus, reporting to CE Asset Management Investment Committee.

Sokolova holds a bachelor’s degree in Business Administration from the Banking Institution of Higher Education, Riga. She also holds a a master's degree in international business from Riga International School of Economics and Business Administration. She also holds the Chartered Financial Analyst® designation.

* Morningstar UK Ltd (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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