Luxury goods company Richemont, which owns renowned brands such as Cartier and Chloé, has unveiled its plan to introduce a shareholders’ loyalty scheme. The scheme will involve the issuance of warrants to investors, which can later be converted into newly created stock. The company will seek approval for this proposal from its shareholders at the annual general meeting on September 9. These measures come as Richemont aims to preserve cash amidst the ongoing COVID-19 pandemic, following a reduction in its dividend to 1 Swiss franc per share.

Chairman Johann Rupert explained that the decision to implement this scheme was prompted by the uncertain economic conditions caused by the pandemic. He emphasized the importance of maintaining an extra liquidity buffer in light of the unprecedented effects of COVID-19 and the broader economic uncertainty. The maturity period of three years for the warrants was chosen strategically, allowing the company to capture any potential future increase in the market price of Richemont shares once the challenges posed by the pandemic have been overcome.

The consideration of introducing a warrant scheme was first mentioned by Richemont when it announced its full-year results in May. The company has faced significant disruptions due to the ongoing pandemic, with its sales nearly halving in the three months leading up to June 30. In response to these challenging circumstances, Richemont also revealed the nomination of Wendy Luhabe, former chairwoman of Richemont’s South African subsidiary Vendome South Africa, to the board of directors.

In summary, Richemont’s proposal for a shareholders’ loyalty scheme aims to provide a liquidity buffer during the COVID-19 pandemic while allowing investors to potentially benefit from future gains as the market stabilizes. The shareholders will have the opportunity to vote on this proposal during the annual general meeting in September.

Useful links:
1. Richemont Official Website
2. Cartier Official Website