For years, equity analysts urged Johann Rupert to spin off tobacco and turn Richemont, the company he chairs and controls, into a “pure play” luxury goods group. In 2008, the independently-minded Mr Rupert finally took heed and returned Richemont’s stake in British American Tobacco to shareholders, leaving his group focused on Cartier jewellery, Montblanc pens and much else.
Today, some of the same pundits are regretting the loss of those high and stable BAT dividends, as the world’s luxury goods industry struggles with its biggest challenges in decades. Demand has tumbled virtually across the globe with no clear sign of recovery. Manufacturers from LVMH Möet Hennessy Louis Vuitton, the world’s biggest luxury goods group, to Italy’s Bulgari, find themselves saddled with stubbornly high costs, leaving little room for manoeuvre. Even beauty has proved vulnerable, contrary to the common claim, as figures for L’Oréal and others show.
