COMPAGNIE FINANCIÈRE RICHEMONT SA

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Repeat & Correct : Richemont Investor Adds to Calls for Action on YNAP

11/09/2021 | 09:29am EDT

("Richemont Investor Adds to Calls for Action on YNAP," at 0749 GMT, incorrectly attributed the quote and didn't indicate the relevant fund at Artisan Partners. The corrected version follows.)

By Joshua Kirby

Compagnie Financiere Richemont SA's struggling e-commerce business is holding back the Swiss luxury group's share price, according to one shareholder, adding to pressure for management to sell or spin off the unit.

There is "significant unrecognized value" within Richemont, Artisan Partners told The Wall Street Journal on Monday.

"In our own estimation, the key source of undervaluation relates to the company's e-commerce business, which currently is loss-making," said David Samra of Artisan's International Value team.

"As you know, we at Artisan International Value are long-term investors focused on superior businesses with high returns, a strong balance sheet and management teams with a track record of creating value," he said, adding that the fund has held a stake in Richemont for many years and is supportive of the company's chairman and controlling shareholder, Johann Rupert.

Artisan Partners holds around 1.4% of Richemont's share capital, according to FactSet.

The comments come after media reports that New York-based activist investor Third Point has taken a sizable stake in Richemont and is pushing for action to boost the share price, which in recent years hasn't matched the rapidity of growth seen at many peers in the luxury sector. Third Point and Richemont both declined to comment on the reports, which boosted the group's share by close to 4% on Monday.

Analysts pointed to Richemont's Yoox-Net-A-Porter e-commerce platform as a drag on operating income and therefore on the company's share price. Divesting YNAP would allow the group to focus on its high-performing brands, as well as giving the group more firepower for potential acquisitions, Bernstein analyst Luca Solca said.

Mr. Samra of Artisan said that over time, YNAP will either have to become a profitable asset, or Richemont will have to turn it into "consumable capital."

"Other investors in the market are beginning to recognize that possibility," he said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

11-09-21 0929ET

Stocks mentioned in the article
ChangeLast1st jan.
COMPAGNIE FINANCIÈRE RICHEMONT SA -1.18% 104.75 Delayed Quote.-22.49%
REMGRO LIMITED -0.51% 139.75 End-of-day quote.6.56%
S&P 500 -4.04% 3923.68 Real-time Quote.-14.21%
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Analyst Recommendations on COMPAGNIE FINANCIÈRE RICHEMONT SA
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Financials
Sales 2022 18 775 M 19 703 M 19 703 M
Net income 2022 2 741 M 2 876 M 2 876 M
Net cash 2022 2 083 M 2 186 M 2 186 M
P/E ratio 2022 21,6x
Yield 2022 2,20%
Capitalization 58 478 M 61 368 M 61 368 M
EV / Sales 2022 3,00x
EV / Sales 2023 2,66x
Nbr of Employees 34 760
Free-Float 88,9%
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Mean consensus BUY
Number of Analysts 26
Last Close Price 102,36 €
Average target price 147,96 €
Spread / Average Target 44,5%
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Managers and Directors
Jérôme Lambert Group Chief Executive Officer & Executive Director
Burkhart Grund Group Chief Finance Officer & Executive Director
Johann Peter Rupert Executive Chairman
Ruggero Magnoni Independent Non-Executive Director
Guillaume Pictet Independent Non-Executive Director