Billionaire Johann Rupert’s luxury goods giant is at China’s mercy

Richemont is highly dependent on China’s luxury goods market, and demand from the Asian nation will play a large role in the company’s future success.

At the same time, Richemont remains well-positioned to benefit from increased global demand for luxury goods, with a strong brand portfolio consisting of beloved, well-known names.

In addition, Richemont is well-priced, trading at a discount to its net asset value, making the luxury goods giant a potentially good buy.

This is feedback from Legacy Family Wealth portfolio manager and director Jordan Toy, who recently shared his views on Richemont in an interview with BusinessDayTV.

Richemont is a luxury goods conglomerate based in Switzerland and forms part of the Rupert family’s empire.

It was formed when Rembrandt, the Ruperts’ historic investment vehicle, was restructured into three companies: Richemont, Reinet, and Remgro. 

Richemont retained the Ruperts’ offshore assets, which consisted mainly of luxury goods brands. Billionaire businessman Johann Rupert serves as the company’s chairman.

Today, Richemont has 24 maisons and businesses in its portfolio, including Cartier, Van Cleef & Arpels, Piaget, Montblanc, Chloe, and Dunhill.

In its latest results for the year through March 2026, Richemont reported a strong performance, with sales up 11% at constant rates to €22.4 billion (R422.46 billion).

Its operating profit grew by 23% to €4.5 billion (R84.88 billion), with a profit of €3.5 billion (R65.99 billion) for the year, up 25%.

Richemont also ended the year in a strong net cash position, with €8.5 billion (R160.25 billion) in cash.

The company attributed these strong results to a remarkable performance from its jewellery maisons, as well as modest growth in its luxury watch segment.

Richemont’s brands performed particularly well in the Americas, the Middle East, and Asia, which all saw double-digit growth.

Chinese demand drives

Toy pointed out that, in the recent past, Richemont has been a standout performer in the broader luxury space, calling its most recent results “quite strong”.

He explained that an overarching theme in the luxury space over the past few years has been a lack of demand from China.

While some of Richemont’s biggest competitors, namely LVMH and Kering, have suffered from this decreased Asian demand, the Swiss-based company has held up remarkably well over the past year.

However, Toy warned that this does not mean Richemont is immune to a further slump in demand from China.

“Whether they can continue to compound, I think it’s largely similar to some of the other luxury players – it’s key what happens in China,” he said. “You need more demand coming out of there.”

This is because China has emerged as a dominant force in the global luxury goods market over the past decade, accounting for roughly a third of all worldwide luxury spending.

While the broader luxury market will remain at China’s mercy, Toy noted that Richemont has a very strong brand portfolio working in its favour.

Unlike some of its competitors, Richemont is more focused on jewellery and watches than on luxury apparel or obtaining a broader brand portfolio.

“When you look at Richemont’s recent results, their jewellery businesses, Cartier and Van Cleef & Arpels, had really good results,” he said.

“Those are pretty strong brands. You can’t start a jewellery business tomorrow and replicate that at all easily.”

Therefore, with Richemont’s strong jewellery brand portfolio and its watch business starting to pick up steam, Toy believes it is well-positioned in the broader market.

“For us, Richemont is a good play. LVMH is one we also quite like from more of a value perspective,” Toy said. 

“Kering is one we still watch from a distance, but Richemont’s all-in-all been a good business for most of our shareholders who’ve had shares in their portfolio.”

In the same interview, Rand Swiss director Gary Booysen pointed out that, in the modern world, “the only real scarcity and value comes from almost fake scarcity”.

“It comes from brands. It comes from brands that are a hundred years old that you cannot replicate,” he said.

“It doesn’t matter how good your technology is, you can’t make something that’s a hundred years old.”

This positions Richemont well for future growth, with Booysen adding that it is also priced slightly better than its biggest competitor, LVMH.