Johann Rupert. Picture: SUNDAY TIMES

Johann Rupert. Picture: SUNDAY TIMES

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FM Edition:

Investors have taken the shine off Richemont, with the company’s share price down 25% for the year to date.

It is becoming increasingly plausible that 2016 could mark the first time since the global financial crisis that the company’s share price ends the year in the red.

Luxury brand companies across Europe have struggled in recent months, hit by terror attacks in key shopping spots as well as the general slowdown in the world economy.

The trend has been particularly pronounced in Switzerland, where companies face the added difficulty of the strong Swiss franc.

Mergence Investment Managers portfolio manager Dirk Steyn says, in Richemont’s case in particular, these problems have been compounded by "very weak demand from traditional strong markets like Hong Kong and Macau".

Richemont owns various luxury brands, including the Cartier, Van Cleef & Arpels and Giampiero Bodino jewellery brands.

Steyn says Richemont’s short- and medium-term prospects put it at risk for a downgrade by analysts and that it is likely that the stock will remain under pressure.

The Geneva-based company, headed by Johann Rupert, expects a 45% plunge in operating profit in results for the six months to end-September, in comparison with the year-earlier period.

"We are of the view that the current negative environment as a whole is unlikely to reverse in the short term," the company says.

"However, we remain convinced of the long-term prospects for luxury goods globally, and in particular for watches and jewellery."

Electus Fund Managers equity analyst Neil Brown says none of the factors depressing the luxury goods market will be resolved by Richemont’s year- end in March 2017, but a couple of them will have improved.