Richemont

Global luxury stocks have come under pressure amidst concerns of a demand slowdown as consumer spending comes under pressure from higher interest rates and inflation in the US, as well as a weak Chinese recovery after easing their Covid restrictions. The resultant sell-off drove a significant correction in price-to-earnings (PE) multiples from the peaks reached in 2021 of 34 times for the sector (excluding Hermès) to the current 19 times, in line with the long-term sector average. Richemont declined some 25% during the third quarter of 2023 and trades on an attractive 15.7 times PE ratio (or 12 times excluding surplus cash on the balance sheet).