When Richemont released their full year results in May this year they indicated that they were sitting on a about 1.6bn Euros in cash. Over the last two weeks we have seen two acquisition announcements from the company neither of which are big enough to have an effect on earnings but definitely worth noting, especially as an indicator of where the company is going and their confidence in the future.
The first announcement was the acquisition of US based, international luxury apparel business.
"Founded in 2001, the Peter Millar line embraces timeless elegance using only the highest quality materials. With a studio and design centre in Raleigh, North Carolina as well as business operations in Durham, North Carolina, Peter Millar is one of today's fastest growing and most sought after brands in the lifestyle apparel market. Global distribution includes North America, Europe, Asia, Australia and the South Pacific. For more information, please visit www.petermillar.com."
According to the announcement,
"the acquisition by Richemont will position Peter Millar for its next stage of development and growth."
So I had a look at the website and the products look good, very much focused on an active, quality lifestyle. Especially golf which I know has and is still ballooning in Asia. Take a look yourself, maybe you will end up buying something! It looks like the kind of aspirational consumer product we like. Richemont are not as focused on clothing but through their Net-a-Porter online site there has been more focus on this business. We back management to pick out the right brands to fall under the very impressive Richemont umbrella.
And then just this morning the company announced the acquisition of a high end watch manufacturer called VVSA.
"Based in Delemont since 1962, VVSA is a high-end manufacturer of stamped exterior components for watches, gold refiner and producer of semi-finished precious metal products destined for the watch and jewellery industry. A historical partner of Richemont's Maisons and Manufactures, VVSA and its 250 employees will reinforce the Group's industrial capabilities via their established technical know-how and state-of-the-art equipment."
This looks like a classic example of economies of scope, buying the manufacturer you normally outsource to in order to cut costs.
Most importantly these acquisitions remind us that the company is still happy to be investing and confident in the future demand of luxury goods. From looking at their past numbers throughout all the turmoil of the last four years it is hard not to trust this judgement.