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French luxury goods group LVMH plans to overhaul Tiffany & Co.’s vast merchandise lineup to increase the focus on gold and precious gems and take its silver bangles upmarket after closing the $15.8 billion takeover of the US jeweler this month.
Six sources, including two people with inside knowledge of Tiffany’s operations, told Reuters the owner of Louis Vuitton would also likely revamp the appearance of the jeweler’s stores and boost its presence in Europe and Asia.
More than a third of Tiffany’s 320 shops are in the United States, and two sources described some of them as out-of-date, shoddy and in need of refurbishing.
“LVMH can give Tiffany the kind of time and money needed to make some big investments in the product range and in stores worldwide, and wait for those to pay off in the medium term,” one of the sources said.
At a town hall in New York for Tiffany’s 14,000 employees on Jan. 8 — a day after LVMH installed a new leadership team — the group’s new bosses laid out their initial plans to focus on high-end, sparkling jewelery, said one person who attended it. The group is also considering building out Tiffany’s lineup in watches, another source familiar with its thinking said.
Compared with rivals, such as Richemont-owned Cartier and Van Cleef & Arpels, as well as fellow LVMH brand Bulgari, Tiffany’s products are a broad range from $150 silver pendants to diamond necklaces priced in the tens of millions.
Silver jewelry has gross margins of around 90 percent and offers an entry point for younger, less wealthy shoppers, but top industry names also need the medium-to-high range — with a price tag above $100,000 — to create an aura of exclusivity, experts say.
In a video message to employees during the town hall, LVMH boss Bernard Arnault, who is also France’s richest man, said he wanted to elevate Tiffany’s standing, even if that took time.
“We will also prioritize Tiffany’s long-term desirability over short-term constraints,” Arnault said, according to a person who attended. At one point brandishing one of Tiffany’s signature robin’s egg-blue boxes, Arnault underscored the label could count on cash-rich LVMH’s resources.
The world’s biggest luxury goods group, also home to Moet & Chandon champagne, was shaken by the COVID-19 pandemic and sales in airport stores plunged, but its biggest labels have been robust.
The mood among some of Tiffany’s workforce is anxious nonetheless.
A senior store employee in Europe said the jeweler would benefit as a more sophisticated, exclusive brand under LVMH, but also worried about the group’s reputation as a demanding owner.
“If a store doesn’t quite work, they just shut it down,” this person said, speaking on condition of anonymity.
Arnault is known for dropping in on stores unexpectedly — including at a Tiffany store in Seoul after the deal was announced in late 2019, where he pointed out blips such as a cleaning product that had been left out on a stand and a pink Post-It note saying “not available” that had been put up on a product, people familiar with the group said.
LVMH and Tiffany declined to comment.
Meanwhile, LVMH on Tuesday posted a 3 percent drop in comparable sales for the fourth quarter, in line with forecasts, as a boom in revenues at Louis Vuitton offset a weak performance at its duty free shops.
LVMH said fourth-quarter sales came in at 14.3 billion euros overall. For 2020 as a whole, when earnings were hit by the coronavirus pandemic that forced retailers to close shops, revenues reached 44.65 billion euros, falling 16 percent from a year earlier on a like-for-like basis, which strips out acquisitions and currency effects.
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