Last year shareholders in global luxury goods group Richemont enjoyed their first real taste of the equity bull market as the share crossed the finishing line with a gain of 46%, comfortably ahead of the industrial index's 23,3% rise. Though Richemont managed a 16% rise in 2004, this was its first significant year-on-year gain since 2000.

Investor enthusiasm for Richemont was underpinned by much-improved fundamentals in the global luxury goods market which had been hit in 2003 and 2004 by global economic woes, war in Iraq and the Sars epidemic. By contrast 2005 brought favourable economic conditions in most of Richemont's principal markets, enabling it to lift turnover 17,4% to euro 4,31bn (R34,9bn) in the year to March 31 2006.

Europe, where sales increased by 14% to euro 1,81bn, remained the biggest sales region, but stronger growth was registered in the US market where sales grew 21% to euro 875m. At constant exchange rates the increase in the Americas was a hefty 26% compared with 14% the previous year. The Japanese market also began displaying a solid improvement with sales of euro 723m, up 15% compared with growth of 3% the previous year.

And for now the global economic outlook appears set for Richemont to enjoy further growth stability. In its May report the 30-nation Organisation for Economic Co-operation & Development (OECD) noted that the sustained rise in its leading indicator pointed to "moderate expansion ahead", despite high oil prices. Encouragingly, Richemont's 16% rise in total annual turnover matched the first half's growth pace and, said management, the trend continued during the post-Christmas fourth quarter of the financial year.

The luxury goods industry can also look forward to robust demand growth from Chinese consumers in the years ahead. According to research by Ernst & Young, sales of luxury goods in China now stand at about US$2bn/year and will grow by about 20%/year up to 2008 and then by about 10%/year until 2015. At that point luxury goods sales in China would be $11,5bn, or almost a third of the world's total.

Good news for Richemont which, using its Cartier brand, in 1990 became the first luxury group to establish a presence in China. Notably, the China International Business magazine rates Cartier the country's top luxury brand.

But while growth prospects appear to be built on a solid foundation, this cannot be said for Seardel, the company that took top honours for share price performance in 2005. Seardel was an unlikely candidate given the woes of the local clothing and textile manufacturing industry which is buckling under the onslaught of cheap imports from China. But in an equity bull market virtually all shares will eventually rise with the tide, which Seardel did, its share price gaining 69,3% in 2005 and 30% in the first four months of 2006.

Pressure from cheap imports is reflected in a sharp fall in Seardel's profitability over the past three years.

Though turnover increased by 5% to R3,75bn between 2002 and 2003, headline EPS more than halved from 75,9c to 35,9c.

Given the bleak outlook for trading conditions, Seardel's share price strength, which has boosted it to a heady 17 p:e and cut its dividend yield to 1,6%, is even more notable.

In its 2005 annual report the group cautions that: "The continued flood of imports of apparel and textiles from China will inhibit growth in revenue." This was evident in a reported 8,8% fall in revenue in the first two months of the 2006 financial year compared with the same period last year.

A reason for Seardel's share price strength could lie in its 40% discount to a net asset value of R1,42c/share. Perhaps value can be unlocked but assets are only worth what they can generate in returns.

From an ROE perspective, the sector's second-biggest company, international furniture manufacturer and logistics group Steinhoff, cannot be faulted. In the year to June 30 2005 Steinhoff lifted its ROE to 32% from 23,7% in 2004. Over the past three financial years Steinhoff also delivered a solid 16,2%/year rise in EPS despite generating a high proportion of turnover and earnings offshore.

In the 2004 financial year 57% of turnover and 67% of earnings were derived offshore. These levels fell to 45% and 58% respectively, in the six months to December 2005 after Steinhoff's purchase of 44% of Unitrans, 26,5% of Amalgamated Appliances (Amap) and 67% of Northeastern Cape Forests.

In 2005 Steinhoff shareholders were rewarded with a 48,8% rise in its share price.

Last year the market did not smile as kindly on 2004's top performers, appliance manufacturers and distributors Amap and Nu-World which lost 12,8% and 10,1%, respectively, in value.

Amap chairman Jack Cohen says there were reasons for the market's caution towards appliance groups, including an end to the year-long boom in home-theatre sales and price deflation driven by ever-cheaper Chinese exports.

Cohen believes these negatives are temporary. He says rising middle-class buying power will continue to drive demand and infrastructure spending will create more jobs.

If anything, 2005 proved yet again that the winners and losers are often the most unlikely candidates for investor adoration and scorn. More surprises no doubt lie ahead this year.