CEO Bogliolo: Tiffany will reach new heights in the LVMH deal

Tiffany´s CEO Alessandro Bogliolo thinks the merge with the French luxury group LVMH will help the company to reach new heights. He commented the merge deal in the company press release yesterday.

-Tiffany has been focused on executing on our key strategic priorities to drive sustainable long-term growth. This transaction, which occurs at a time of internal transformation for our legendary brand, will provide further support, resources and momentum for those priorities as we evolve towards becoming The Next Generation Luxury Jeweler. As part of the LVMH group, Tiffany will reach new heights, capitalizing on its remarkable internal expertise, unparalleled craftsmanship and strong cultural values, Mr Bogliolo said.

The takeover deal was well managed. According to Financial Times, the LVMH CEO Bernard Arnault visited the US in the opening ceremony of the Louis Vuitton leather production plant in Texas in October. The US President Donald Trump was also one of the firsts to know of the acquisition, although no names was mentioned to him, Mr Arnault told the FT reporter yesterday of that Texas-event.

And the business circles are small in the luxury business. For example the CEO of Tiffany, Mr Bogliolo is also a known-person to LVMH from his earlier carrier as a senior position at the Italian fashion house Bulgari, now part of the French luxury group.

The Tiffany takeover or LVMH´s Christmas present is the biggest deal for the company. According to Bloomberg Opinion the deal values the Tiffany about 16 times Ebitda, which is nice compared to the earlier deals in the industry. According to Bloomberg data, the LVMH purchase of Bulgari in 2011, the valuation was 23-24 times, as was the Swiss company´s Swatch purchase of Harry Winston in 2013.

So, what is going to happen next? Will the mergers and acquisitions trend in the luxury business continue? Sure. And all luxury companies are heading to Asia. It is also expected that LVMH will increase the Tiffayny´s presence in the Asian markets and find the best locations for the high-end consumers of Tiffany. All studies show that the biggest growth for luxury brands is coming from Asian consumers in the coming years.

As Mr Arnault told the Financial Times, LVMH is increasing the desirability of the Tiffany brand.

– My goal with Tiffany -as it is for Louis Vuitton or Dior – is that desirability for the brand should be higher in 10 years time than it is right now, he said in the FT interview.

The announced deal will increase the other major luxury brands interest to join the growth race. The French rival Kering, with brands like Gucci, Saint Laurent and Bottega Veneta and the Swiss Richemont, with brands like Cartier, IWC and Piaget, are in the line.

The stock markets have also seen the increase of interest and for example nearly all the major luxury companies were trading up on Tuesday in the Tiffany aftermatch.

LVMH was trading up 0,77 % at 407 euros, Tiffany slightly up 0,01 % to 133 dollars, Kering (KER) up 0,40 % at 546 euros and the UK Burberry (BRBY) up 0,24 % to 2093 pounds. Only the Swiss Richemont (CFR) was trading down, 0,57 % at 76 Swiss francs.

Picture: Luxury watches from LVMH Group: Hublot Big Bang, Tag Heuer, Bulgari

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Burberry Group revenue 2,7 billion pounds

The UK luxury company Burberry (BRBY) reported preliminary fiscal figures in London today. According to the release, the 12 month revenue was 2,7 billion pounds, nearly at the same level as year before. The operating profit increased by 7 % to 438 million pounds.

– We made excellent progress in the first year of our plan to transform Burberry, while at the same time delivering financial performance in line with expectations. Riccardo Tisci’s first collections arrived in stores at the end of February and the initial reaction from customers is very encouraging. The implementation of our plan is on track, we are energised by the early results and we confirm our outlook for fiscal 2020, the CEO Marco Gobbetti said in the release.

Burberry said that the company continued to focus on financial and operational discipline.

– We delivered cumulative cost savings of  105 million pounds, ahead of plan, which was largely reinvested into consumer facing activities to support the transformation. In addition, we expanded the scope of our restructuring programme to increase our target from 120 million to 135 million pounds by the end of fiscal 2022 as we develop Burberry Business Services, the company said.

Burberry also was rated to the leading luxury brand in the 2018 Dow Jones Sustainability Index. The factors behind were the circular thinking of clothes and minimising the unnecessary use of plastics in the supply chain.

The company is listed on the London Stock Exchange since 2002, when the company had its IPO. The share price declined after the report by 5,91 % to 1808 pounds.

 

 

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Luxury brands gained due to EU court ruling

The European luxury brands gained in the European Stock Exchanges today. The reason behind the upward trend was the EU court ruling saying that the luxury brand owners can have a say in which digital platforms the retailers can sell their luxury products.

Many luxury companies have been worried over the brand imago related to different digital platforms. The EU court ruling lifted stocks like Kering Group (KER) by 0,56 %, LVMH (LVMH) by 1,14 %, Burberry Group (BRBY) in London by 0,64 % and  Christian Dior (CDI) in Paris by 1,28%.

Global luxury brands have been building their digital presence and imago via social media during the couple of years, but also starting their own e-commerce platforms in order to make the customer dialoque direct and to keep the service level and personalization as expected.

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