Thursday, 30 November 2023 Reading time : 3 minutes

The shares of luxury goods group Richemont are currently under heavy pressure. This is illustrated by a look at the Swiss Leaders Index (SLI), which shows that the stocks have repeatedly been at the bottom of the table in recent days. The correction follows a peak that took Richemont shares to record highs in the spring. They closed at an all-time high of CHF 155.65 in mid-May and have since lost around 30% of their value.

There are several reasons for investors' scepticism. As such, the market environment for the entire luxury sector has deteriorated this year. Following the end of the corona pandemic, manufacturers of jewellery and luxury watches initially benefited from consumers' pent-up demand. However, consumer sentiment has deteriorated in recent months. The effects are not only reflected in the weakening sales growth of Richemont but are also leaving their mark on the competition.

But Richemont itself has also been in the news recently, triggered by the turmoil surrounding British online fashion retailer Farfetch. In August 2022, the Geneva-based company had agreed a deal with Farfetch to sell a stake in its own loss-making platform Yoox-Net-a-Porter (YNAP). That plan is now in jeopardy, with media reports suggesting the founder wants to delist the company following Farfetch's recent heavy losses. Richemont has made it clear that the group has no financial commitment to Farfetch and has no intention of investing in the company. It is currently unclear what will happen with the sale of YNAP.

However, the fall in Richemont's share price also opens up opportunities. The potential negative developments seem to have been priced into the share price. The luxury goods group is also defending its leadership in the jewellery segment and is well diversified geographically. For investors who are sceptical about whether Richemont shares have already bottomed out, the Barrier Reverse Convertible offers some protection against further price setbacks while guaranteeing a coupon.

Callable Barrier Reverse Convertible on Richemont