Research archive for CFR

Richemont are getting a punch in the guts this morning, Nomura have downgraded Burberry, but it comes after the luxury goods maker suggested that full year profits would be at the bottom of the expected range. Check out the Burberry First Quarter Trading Update and Interim Management Statement. So you read that right? Seems ok. But the stock got drilled, down over 18 percent. It is not even the most expensive of its peer group. Trench coats. Turns out people prefer watches. Although I can see myself in this one: VELVET COLLAR CHESTERFIELD COAT. For the five days or so that I might need it in winter down here, I am going to pass. Cheapskate. My point however is simple, trench coats are not watches and jewellery.

Richemont released a five month sales update this morning and it looks decent enough. The sales per region are always an indicator of who is doing well. However, the sales in Europe have mirrored the real economies, and this is often attributable to the tourist buying. You see, in places like China, where luxury goods are taxed at a higher rate than in Europe, tourists from the East often pick up cheaper products whilst travelling. And of course on the high streets of Europe consumers can be sure that they are getting the finished product. A discerning customer can always spot the genuine product, that goes without saying, not so? This is what the release says: "Europe was strong, particularly in the retail channel in major tourist destinations."

Richemont enjoyed a huge day as the trading update was welcomed with both hands. 6.35 percent better on the day, just less than 50 Rands a share at the close. Although during the day the stock traded comfortably above that level. I did also see a research note that suggested that Richemont was still a screaming buy. The WSJ (Subscription only, sorry) had an article titled Richemont Chases Luxury Status, with the conclusion that they are cheap. Now there is a turn up for the books, Richemont looking cheap. I remember the reluctance of people to buy them because they looked expensive, all the time. Perhaps those folks can buy them close to the all time highs. I am of course being facetious. You have to feel a bit for this guy, but he got it wrong: Bronte Capital Just Closed A Luxury Short At A Loss. Wrong. And perhaps that piece is everything that I need to lead me nicely into my next piece.

There was a trading update from one of our favourite companies Richemont this morning. We group Richemont with Nike and McDonald's in a segment, aspirational consumerism. There are folks who are aspiring to consume products that were once out of their reach, but because their circumstances have improved markedly from a generation before, they are able to now. In Richemont's case it is the nouveau riche, and their product is an "expensive" purchase. In some parts of the world people eat baked beans but drive a swanky car to show that they have "arrived", in other parts of the world it is a flashy watch and piece of jewellery. And that is the audience that Richemont are trying to capture, not only in the old world but also in the newer and emerging nations, in particular China.

Richemont, the luxury goods producer and retailer, have released results for the full year to end March 31 this morning. And they look ahead of expectations, I can tell because the share price is comfortably ahead of the rest of the market. You can check out their Annual Results FY 12, from which I will be pulling a whole lot of data. Sales grew a whopping 29 percent to 8.867 billion Euros. With record operating margins (23 percent) the company has seen a 51 percent gain in operating profits which top 2 billion Euros (2.04 billion) for the first time. Net profits clocked 1.54 billion Euros, an increase of 43 percent. Operating expenses increased quite sharply by 19 percent, but obviously this is blurred when you see such good results. And you also see sharp increase in capex, to 6 percent of sales (from 4.7 percent), which is all aimed at increasing their retail presence, nearly half of all capex, and more importantly manufacturing, around 27 percent. Total capex for 2012 was 535 million Euros.

Richemont third quarter sales have hit the screens this morning. They are great. Well, at least I think that they are great all things considered. The highlights: "Sales in the quarter increased by 24 % at actual and constant exchange rates.". Highlight. OK, so here is the table of sales and it is very important to note that for the very first time in this quarter, sales in Asia Pacific have overtaken sales in Europe. So, in short, their most important sales area is not the traditional old world, but rather the new world. And the new world has three things going for it, a large population, the base was low and is expanding fast and the future is brighter. Check it out:

Richemont results this morning!! I hardly slept last night, I was so excited about these. No, I cannot tell a lie. I do sleep pretty well. They pretty much tell it like it is in their release -> Richemont, the Swiss luxury goods group, announces its unaudited consolidated results for the six month period ended 30 September 2011.

Richemont are out with sales for five months to end 31 August, and I must admit, they look pretty impressive to me. They are better than I would have expected against the noise that we are seeing out there, again this seeming disconnect between what companies are reporting and what the economic "situation" is on the ground. I am going to take a screen grab from their release:

Richemont results this morning. This is for the full year to end March. And the results are as sparkling as some of their jewellery items. Sales for the full year 2011 are 33 percent higher than the prior reporting period, coming in at 6.892 billion Euros. Gross profits are 38 percent better, with gross margins widening by 210 basis points to 63.7 percent. Yowsers, nice to have those types of margins. Operating profits were 63 percent higher to 1.355 billion Euros. Operating margin is an eye popping 19.7 percent, a whole 370 basis points better than last year. Credit to management for having read it right, well done. The dividend (which irritates South African shareholders) basically comes to 4.5 Swiss Franc cents. Which is just over 35 ZA cents. Sad face. In a Swiss environment where they are principally listed, this yield is about good enough.

Richemont was caned yesterday too. And is getting a big thrashing again today. I trawled through the 2010 annual report to find what I was looking for, the sales in "JAPAN: The Japanese market, Richemont's second largest single market with 12 per cent of Group sales, remained challenging throughout the year for luxury businesses generally. Yen-denominated sales declined by 17 per cent. The appreciation of the yen over the period softened the decline to 10 per cent in euro terms."

Richemont out with a quarterly sales update, so far the market looks a little disappointed to me, the stock in Zurich was down two and a half percent at the open. I guess that is all you need to know about that, market participants a little disappointed with the numbers. I did a hack from the official release so that you can see the sales table yourself - Trading statement for the three months ended 31 December 2010.

Richemont results for the six months to end September this morning. Sales of 3.259 billion Euros which trounced the same half last year by 37 percent, gross margins better by 44 percent and that translates to an earnings per share increase of 84 percent to 1.144 Euros. That is an excellent outcome for all and sundry. OK, but the stock trades in Switzerland and is quoted in Swiss Francs. And the version here is a 10 for 1 Global Depositary Receipt.

Richemont released a sales update for the five months to the end of August this morning. I must say that it looks more than a little impressive. As they point out though: "The strong growth in sales reflects, in part, the low comparative figures reported in the prior period." A picture tells a thousand words (even if it is a table), check out the sales updates for their various geographies and through the different business segments.

Richemont out with results this morning. 599 million Euros worth of profits is a miss, the market consensus was at 725 million Euros more or less. Margins under pressure, notwithstanding some good cost cutting exercises. Operating profits were 14 percent down, whilst sales were lower by four percent to 5.176 billion Euros. From the release:

Richemont have confirmed the NET-A-PORTER purchase this morning. Not kidding around here. As they point out, The offer values the equity of NET-A-PORTER at GBP 350 million. Richemont currently holds some 33 per cent of the issued share capital of NET-A-PORTER Limited.