By Francesca Piscioneri, Silvia Aloisi and Sarah White
PARIS/MILAN (Reuters) – French luxurious items group LVMH plans to overtake Tiffany & Co’s huge merchandise lineup to extend the concentrate on gold and treasured gems and take its silver bangles upmarket after closing the $15.Eight billion takeover of the U.S. jeweller this month.
Six sources, together with two individuals with inside data of Tiffany’s operations, informed Reuters the proprietor of Louis Vuitton would additionally doubtless revamp the looks of the jeweller’s shops and increase its presence in Europe and Asia.
Greater than a 3rd of Tiffany’s 320 retailers are in the USA and two sources described a few of them as out-of-date, shoddy and in want of refurbishing.
“LVMH may give Tiffany the form of money and time wanted to make some large investments within the product vary and in shops worldwide, and watch for these to repay within the medium time period,” one of many sources mentioned.
At a city corridor in New York for Tiffany’s 14,000 staff on Jan. 8 – a day after LVMH put in a brand new management crew – the group’s new bosses laid out their preliminary plans to concentrate on high-end, glowing jewelry, mentioned one one who attended it. The group can also be contemplating constructing out Tiffany’s lineup in watches, one other supply conversant in its considering mentioned.
In contrast with rivals, reminiscent of Richemont-owned Cartier and Van Cleef & Arpels, in addition to fellow LVMH model Bulgari, Tiffany’s merchandise are a broad vary from $150 silver pendants to diamond necklaces priced within the tens of thousands and thousands.
Silver jewelry has gross margins of round 90% and affords an entry level for youthful, much less rich consumers, however high trade names additionally want the medium- to excessive vary – with a price ticket above $100,000 – to create an aura of exclusivity, consultants say.
In a video message to staff throughout the city corridor, LVMH boss Bernard Arnault, who can also be France’s richest man, mentioned he wished to raise Tiffany’s standing, even when that took time.
“We may even prioritize Tiffany’s long-term desirability over short-term constraints,” Arnault mentioned, in accordance with an individual who attended. At one level brandishing one in all Tiffany’s signature robin’s egg-blue packing containers, Arnault underscored the label might rely on cash-rich LVMH’s sources.
The world’s largest luxurious items group, additionally dwelling to Moet & Chandon champagne, was shaken by the COVID-19 pandemic and gross sales in airport shops plunged, however its largest labels have been strong.
The temper amongst a few of Tiffany’s workforce is anxious nonetheless.
A senior retailer worker in Europe mentioned the jeweller would profit as a extra refined, unique model below LVMH, but additionally nervous in regards to the group’s repute as a demanding proprietor.
“If a retailer doesn’t fairly work, they only shut it down,” this particular person mentioned, talking on situation of anonymity.
Arnault is thought for dropping in on shops unexpectedly – together with at a Tiffany retailer in Seoul after the deal was introduced in late 2019, the place he identified blips reminiscent of a cleansing product that had been neglected on a stand and a pink Put up-It observe saying “not accessible” that had been put up on a product, individuals conversant in the group mentioned.
LVMH and Tiffany declined to remark. LVMH is because of report full-year 2020 outcomes in a while Tuesday.
SOOTHING WORDS
After a bruising court docket battle halfway by the acquisition course of, which ended with Tiffany and LVMH renegotiating the worth tag barely downwards, Arnault had soothing phrases for the U.S. jeweller.
He informed the city corridor Tiffany’s resilience in current months had exceeded LVMH’s expectations, a type of current mentioned.
The group had beforehand referred to as Tiffany’s prospects “dismal” attributable to poor administration throughout the COVID-19 disaster.
Tiffany regained some floor by on-line gross sales and in China in its final quarter. Jewelry as an entire, one of many quickest rising luxurious sectors in recent times, has been extra resilient than different areas throughout the pandemic.
Tiffany is much less uncovered than rivals to Asia-Pacific – a significant driver for luxurious gross sales – which accounted for 28% of its worldwide gross sales of $4.Four billion in 2019. Europe stood at 11%.
Jean-Christophe Babin, who runs Bulgari, the model purchased by LVMH in 2011, informed Reuters negotiations with mall house owners on shops or with airports on promoting billboards have been much more advantageous when carried out by a gaggle comprising dozens of manufacturers.
“We are able to share a display at arrivals with (watch model Tag Heuer),” Babin mentioned in an interview. “These are synergies that we had and that Tiffany may have that can assist enhance profitability.”
Babin mentioned that Bulgari financed its personal investments in shops and manufacturing, however that inner competitors with different LVMH stablemates had cranked up the jeweller’s ambitions and efficiency.
“The model was a sleeping magnificence, the arrival of LVMH was a wake-up name,” Babin mentioned.
MARKETING SPLURGE?
New York-based Tiffany, based in 1837, achieved world fame with the 1961 film “Breakfast at Tiffany’s” starring Audrey Hepburn, however a recent advertising and marketing push might assist the model.
Alexandre Arnault – one in all 4 Arnault youngsters with roles at LVMH and now Tiffany’s govt vp, in command of product and communication – informed the city corridor he would concentrate on promoting campaigns and luring younger prospects.
The 28-year-old helped LVMH purchase baggage maker Rimowa and gave it a hipster edge whereas CEO there, by collaborations with Dior that made it horny for the runway.
The younger Arnault will work alongside new CEO Anthony Ledru, who ran Vuitton’s international industrial actions however can also be recognized for rolling out its high-end jewelry line and had a earlier stint at Tiffany and likewise at Cartier.
He takes over from Alessandro Bogliolo, who had already overseen a multi-year renovation of Tiffany’s flagship New York retailer on Fifth Avenue, and the acquisition of an 80-carat-plus oval diamond to be set in a necklace that can turn out to be its most costly piece of jewelry.
(Reporitng by Francesca Piscioneri in Rome, Silvia Aloisi in Milan and Sarah White in Paris; Further reporting by Melissa Fares and Vanessa O’Connell in New York and Silke Koltrowitz in Zurich; Enhancing by Matthew Lewis and Barbara Lewis)
