The worst is over

Finweek English Edition - - MARKET PLACE - *The writer owns shares in Richemont.

2016 was a tough year for Richemont* share­hold­ers as the com­pany started the year above R110 be­fore slid­ing to be­low R80 as a sense of gloom set­tled over the share and its re­sults. But the re­cent trad­ing up­date for the third quar­ter to end De­cem­ber shows that the busi­ness man­aged a turn­around since the bleak­ness of the first half of the year.

Sales in­creased 6%, with the Asia Pa­cific re­gion do­ing es­pe­cially well. Here sales were up 9% af­ter slid­ing 10% in the first half. Watch sales were the sore point as the com­pany was even forced to buy them back from the sales chan­nel af­ter sales fell 17% in the first half. But in the third quar­ter this di­vi­sion recorded a mod­est 2% de­cline, sug­gest­ing a strong re­ver­sal in for­tunes. I have al­ways said that while lux­ury goods will have tough times every so of­ten, peo­ple’s de­sire to own such prod­ucts will not fade. Con­cerns about smart watches and fit­ness track­ers are also mis­placed as ex­pen­sive watches are not about func­tion but rather about show­ing off one’s wealth. Af­ter the up­date Richemont was trad­ing back at above R100, not cheap but a fair price for a qual­ity stock.

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