Luxury brands conglomerate Richemont, which is controlled by the Stellenbosch-based Rupert family, has quietly increased its interest in global travel retailer Dufry.
In March 2017, Richemont acquired an initial 5% in Swiss-based Dufry, which operates more than 2,200 shops in airports, cruise liners, ports, railway stations and tourism hubs. At a presentation of the interim results to end-September on Friday, it was confirmed Richemont had increased its stake in Dufry to 7.5%.
Jon Cox, an analyst at Kepler Cheuvreux, unsuccessfully pushed for more detail.
Richemont chief financial officer Burkhart Grund said there was not much to add.
"During our roadshow in May and June, we said we had no plans to significantly increase our stake in Dufry."
He said Richemont had met Dufry’s management to work on business opportunities.
"I think there is a deployment plan that has been worked out with the management…."
Asked whether the talks could lead to the retailing of soft luxury goods and entry-level luxury watch brands at Dufry’s stores, Grund said the opportunities were probably in fashion accessories and leather goods.
While Richemont posted a strong set of interim results, the performance of its fashion and leather goods segments lagged the growth in the core jewellery and watch-making maisons.
Richemont’s divisional breakdown showed the "Other" division — comprising leather goods, fashion and writing instruments — managing a long-awaited turnaround with profit of €6m. However, margins were skinny at just 0.7%.
Mario Ortelli, an analyst at Sanford C Bernstein, said leather goods made up just 7% of Richemont’s business, but the group had invested in operating facilities for this segment.
Grund conceded Richemont had "not been very good" on the soft side of the business.
"We’ve come to the realisation through a success story that we’ve had with [writing instrument maison] Montblanc that there is a supply-chain model that is very different from the one in which we excel, which is jewellery and watches."
Grund said Richemont had realised it could explore leather goods opportunities in other maisons in the group.
Richemont was building development capacities for leather goods by extending the Montblanc leather hub operations into additional brands.
"We think there are significant opportunities in leather goods. But before we really lever that up on the product development side, we need to have the supply chain capabilities and we’re building that up now."