Richemont reorganizes in an effort to rejuvenate businesses
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Richemont reorganizes in an effort to rejuvenate businesses

The world’s second largest luxury company Richemont, owner of brands like Cartier and Montblanc, is reorganizing itself to become more efficient. This means divesting itself of struggling Chinese brand Shanghai Tang and changing up the company’s management structure. It also means investing in the world’s biggest travel retailer, Dufry.

Shanghai Tang was the first luxury brand launched in China, and Richemont took an interest in it way back in 1998. From 2008, it became a wholly owned subsidiary. Then, in June this year, it sold the brand to an Italian entrepreneur for an undisclosed amount. Weaker demand in China has hurt the company over the last few years, but now that the Chinese taste for luxury is improving, Richemont sees another way to capitalize on it: through travel retail.

Richemont’s share price has risen by 30% so far this year

richemont graph 240817

Source: Yahoo Finance

To get in on that action, the company has invested in Dufry, a titan in duty free retail. Foreseeing that travel retail will be in huge demand over the coming years, Richemont disclosed a 5% stake in Dufry in May this year, giving it access to new sales channels for its brands. But this is not the only change that the company is making.

In March, Richemont announced that it was retiring the CEO role, and handing the reigns back to Johann Rupert, the company’s founder and majority shareholder. Can he continue the company’s turnaround and help it outperform rival LVMH?

Disclosure
Dominion holds Richemont, Dufry, and LVMH in its Global Trends Luxury Fund.


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