Richemont Shares Rise on Profit Announcement
Swiss luxury conglomerate Richemont exhibited strong growth in 2012, despite significant investments and the heavy tariffs imposed on its goods by Chinese regulators. As the owner of several luxury brands including Cartier, Richemont is second only to LVMH in the scale of its luxury operations.
For the first half of 2012, Richemont’s profits increased between 20-40% according to the company. The Swiss stock exchange was quick to respond, sending shares of the company 5.5% higher in trading this week, ending at 59.15 Swiss francs.
2012’s promising numbers follow 2011’s healthy growth of 43 percent. Richemont expects to see continued advancement through the remainder of this year, thanks in part to the strength of the Swiss franc. Considering the volatility of exchange rates, some experts take a more cautious view regarding the muscular, non-Eurozone currency .
“In the short term, foreign exchange is helping Richemont, but it won’t help forever,” Zuercher Kantonalbank analyst Patrik Schwendimann told the Wall Street Journal.
Other clouds on the horizon include an old-fashioned Catch-22 in mainland China, where luxury items such of Richemont’s cost 40% more than the same goods sold in Europe or Hong Kong. This has resulted in Chinese buyers going overseas to purchase their high-end goods rather than frequenting luxury boutiques within China, effectively negating the advantage of investing in a brick and mortar presence in China.
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