My Perspective
Being a lover of luxury, I can’t help but admire businesses that exhibit control, predictability, and growth. Among the most noteworthy publicly traded luxury businesses are Hermes (OTCPK:HESAF), Ferrari (RACE), and the LVMH Group (OTCPK:LVMHF), which I’ve written about recently. Today, we’ll examine whether Richemont (OTCPK:CFRHF) shares similar characteristics as these compounders.
Though Richemont may not possess the same level of quality as the aforementioned names, it does have appealing traits, including a quality shareholder base, family ownership, and outstanding leading brands.
In contrast to others, Richemont is currently selling at a good – maybe even a great – price for long-term shareholders.
The Luxury Titan
Richemont, based in Switzerland, is a luxury conglomerate primarily focused on the watches and jewelry industries. With a diverse portfolio of luxury brands, it has a strategic dominance in the jewelry sector, which constitutes 51% of its business. With a focus on jewelry and watchmaking, Richemont is in a league of its own.
Cartier and the Jewelry Industry
The luxury jewelry industry stands out for its resilience, high-profit margins, and long-term performance. Richemont’s leading brands, like Cartier, retain value over time and exemplify timeless luxury. And with the market gravitating towards larger players, they open pathways for significant growth through strategic acquisitions.
At the forefront of this thriving industry is Cartier, the flagship brand, with a rich French heritage spanning almost 180 years, and a coveted position amongst the top 10 luxury brands by value, according to Brand Finance.
Cartier’s unique ability to increase volume without compromising its luxurious essence makes it a standout brand, and its extensive history and French heritage make it exceptionally resilient.
Why Richemont Shines
Richemont is under the control of Johann Rupert, who holds 51% of the voting rights and approximately 10% of the company’s shares. As the founder of the group and the chairman of the board, this fact is particularly appealing. Rupert’s substantial stake underscores his significant commitment, with a substantial portion of his family fortune tied to the success of the business.
