The market’s faith in Richemont appears to have been vindicated by the latest update from the luxury goods company. Richemont’s share price has soared 34% in 2017. Richemont and Naspers are almost wholly responsible for the JSE top 40’s 16% gain. On Tuesday, the owner of Cartier, Montblanc and Jaeger-LeCoultre said operating profit for the six months ended-September would be about 45% higher against the previous six months and as much as 80% higher year on year. The year-on-year performance has been flattered by 2016’s exceptional inventory buy-backs, where Richemont took watch stocks that were not selling and destroyed them rather than cheapen the appeal of its high-end luxury brands. That cut sales in the watch division 11% and slashed operating margins to just 7.8%. Now the expected profit increase comes on the back of an improved trading performance in which sales have grown 10% in reported currencies and 12% on a constant currency basis. Richemont "seems to have benefited from ...
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