Share Dividend Has Become A Luxury For Luxury Goods Producers.

Yes

For manufacturers, higher share dividends have gradually become "luxury".

It is reported that since 2016, Switzerland luxury group Richemont (peak group) and Italy luxury group

SpA's share price has dropped more than 20%, and it is still the target of short investors.

Although sales are falling, many people think they will continue to raise share dividends, which is attractive to many investors who are short sellers.

Simon Colvin, an analyst at data analysis firms's IHS Markit Ltd., said: "despite many key points,"

Sales are very weak, and these companies are still improving their dividends.

If dividends are too high, they may have a long-term impact on the company's continuing operation.

If you are a target investor, you should be careful.

The slowdown in China's economic growth, the impact of terrorist attacks on tourism and the decrease in luxury consumption of tourists have had a great impact on the luxury industry. Financial Services Company's UBS Group AG (UBS) believes that the situation is likely to deteriorate further.

But even though profits and sales performance are not ideal, many luxury goods groups have increased their dividends to attract investors.

However, this strategy has not worked in the past year.

Morgan Stanley (Morgan Stanley), a company that tracks steady and high dividend yields, has fallen 16% in the past year, down to more than three times the European Storck (Stoxx Europe 600 Index) index.

Prior to that, the peak group forecast on Wednesday that profits and operating profits in the first half of the year will drop nearly 50% (see details: "sales in the first five months of the new financial year of the peak group fell by 14%, forced to buy over the Asian surplus stock"), but analysts still think they will increase dividends; the Tod 's group has declined for sixth consecutive quarters (see the report: "Tod s group's profits in the first half of the fiscal year will fall 25.6%, and the number of shops opening and closing will be flat next year"), but the expenditure on dividends will increase by 15%.

According to the data, the two companies are the two most profitable companies in Europe, and the venting ratio (venting ratio = the current short selling number / average daily turnover) exceeds 6%, which is also two of the top companies.

Similar to them, Italy luxury group Salvatore Ferragamo SpA and Germany Hugo Boss AG AG are two of the most preferred targets in the short selling market. The ratio of the two parties is more than 5%, and the share price is also on the decline.

Although the sales performance of the two companies is poor, their dividends are higher than the average level of the luxury goods industry.

The global clocks and watches, Switzerland's Swatch Group AG, the profit in the first half of the fiscal year is the lowest in the past seven years (see: "Swatch group issued a profit warning: the sales in the first half of the fiscal year will fall by 12% and the profit shrank by more than half" under the adverse environmental impact), but dividends are higher than the average in the past seven years, and the venting ratio is as high as 27%, the highest in the European Storck index.

The dividend payout of LVMH group and Kering SA (Open Cloud group) is also higher than the average level of the industry, but their sales demand in some key markets is increasing, which also drives up the stock price.

The emptying ratios of the two are lower than 1.2%, lower than the overall average level of the luxury goods industry.

On Wednesday, the annual performance expectations have been cut down (see details: "Herm s s International SCA" (Hermes group), which is "the first financial data in the first half of the year, which has reduced the whole year's expectations", is currently the largest among the luxury magnates, with the venting rate of only 0.7%, and the share price has risen by 14% this year. "Herm s"

However, Luzerner Kantonalbank AG trader Benno Galliker believes that even if the company can maintain high dividends in the short term, the deterioration of sales will eventually affect the company.

"If you start to cut dividends, everyone will think the company is in a bad state, so they will keep a higher dividend level if they still have money."

He said.