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

Business Finance Lifestyle

Microsoft and Tiffany lifted US stocks in the opening

The tech company Microsoft (MSFT) and luxury company Tiffany (TIF) lifted the US stocks in the opening on Monday. Microsoft´s deal with the Pentagon cloud computing service, the value of over 10 billion dollars, raised the company shares. Microsoft was up 2,23 % and was trading at 143,87 dollars in New York.

The shares of the luxury house Tiffany rose over 30 % in the opening, after the French luxury group LVMH (LVMH) has made 120 dollar a share takeover bid of the US company during the weekend.

Tiffany´s shares opened at 127,65 dollars and was trading at 129,95 dollars after some analysts have raised the target price and upgraded their recommendations. Some market analysts think that Tiffany may get also interest from luxury rivals such as the Swiss Richemont (CFR) and the French Kering ( KER).

Richmond was also trading up, 2,93 % at 77,22 francs in Zurich, while the French Kering was trading down 0,66 % at 510 euros in Paris.

S&P 500 -index traded record high, while Nasdaq and Dow Jones are still some behind from their peaks. S&P 500 -index was up 0,5 % to 3039 points, Dow Jones was up 0,51 % to 2709 points and Nasdaq 0,84 % to 8312 points.

In London, where the Brexit-delay is now granted to the end of January 2020 if needed, the FT-SE 100 -index was trading also up 0,15 % to 7335 points. The UK Parliament will debate today about the elections and the possible days for it.

 

 

Business Finance

Hublot CEO: Double digit growth this year – Chinese consumers ranking 1st

Hublot CEO Ricardo Guadalupe says that he expects the company to grow double digit, that is about 10-11 %, this year, well above the average luxury watch industry. Speaking to ComteamPUB+ he says that this year also the Chinese consumers will be the first big customer segment for this Swiss Luxury Watchmaker.

– This year will be very unique for Hublot. Our growth estimate is double digit that is 10-11 %, which is well above the 5-6 % average growth rate in the luxury watch industry this year. This year is also the first year for Chinese consumers to be ranked the number one. Our biggest growth is coming from the Greater China area, he says to ComteamPUB+.

Hublot, part of the LVMH Group (MC:FP),  is having 8 different brand stores in China and totally 18  in Greater China and the company is planning to open new stores globally so that the total stores would be around 100 in the next couple of years. This week the new opening is in Genf, Switzerland and in June they will open a new brand store in London, in the Old Bond Street.

-We want that our customers can experience the Hublot brand when they are travelling. So this is also important that the store locations are fitting our targets. We also want to demonstrate our strong brand, he explains.

Digital transformation in the focus

Digital transformation is in the focus of luxury watch industry nowadays. Companies are building different customer experiences in the internet with storytelling and strong social media channels. For example Hublot is having 2,9 million Instagram followers and in Facebook they are having 4,1 million followers.

-Digital transformation is shaping our industry. For example Hublot is having now 50 % of its advertising costs in digital channels compared to other media channels. And we are planning to build our own e-commerce platform in the couple of years. We want Hublot digital boutiques to offer a new Brand experience to our worldwide customers, he adds.

This e-commerce has been very difficult with the luxury watch industry because of the pricing and brand value. For example another Swiss luxury watch company, Richemont, has decided to buy back their luxury watches from external dealers. This has caused the company 200 million euros profit fall according to the Financial Times.

Mr Guadalupe sees the market differently and says that Hublot would not have to do the same thing than Richemond.

-We know our customers and we track the watches we sell. Hublot has no stock while our production is in line with the demand, he explains.

Hublot´s annual production is about 50.000 units, price range from 6000 – 50.000 euros each and the production site is in Nyon, Switzerland. The average price is 20 000 euros according to the company.

The first smartwatch, Hublot Big Bang Referee

During the BaselWorld2018 Hublot also launched its first smartwatch, operating with Android. This luxury smartwatch is part of the company partnerships with FIFA World Cup now in June in Russia.

-We are thrilled with the feedback from this watch, Hublot Big Bang Referee FIFA World Cup Russia 2018. This is really the first smartwatch for us and it is also seen as the first marketing tool for our FIFA partnership. We have invited about 1000 stakeholders in our FIFA events and we are looking forward for this big event, Mr Guadalupe comments.

The luxury smartwatch industry is very diversified. Apple Watch is the market dominant, but other luxury watchmakers like Louis Vuitton, Hermes and Tag Heuer are also in the markets with their smartwatches. In the LVMH Group, the development of the smartwatches, is being taken care of the internal development unit.This is also the way the Group can have efficient R&D expenditures. 

It is estimated that the global smartwatch sales would exceed 141 million units this year, while the estimates for the last year were 75 million units. In 2016 the sales were 38 million units.

Hublot was the first luxury brand to invest in football and has partnered with football for over 10 years and the company has different brand ambassadors like Pele, Usain Bolt, Dwyane Wade, Justin Rose, Dustin Johnson and Lang Lang.

The company has worked with the luxury car manufacturer Ferrari for many years and according to Mr Guadalupe some kind of connected smartwatch with Ferrari might be one option in the future.. The autonomous, connected cars can have also new innovations for smartwatches.

-When we work with smartwatches, it is good to remember that it is totally different market compared to mechanical watches, which is our core business. But working with wearables we want to show the innovative, unique and piece of art work in our products, he says.

The launched Hublot Big Bang Referee smartwatch enable users to take part in the FIFA game by sending them notifications and live score updates.The company says they have produced 2000 units of this watch so far.

Hublot and sustainability

As part of the LVMH Group, Hublot has also developed tools to track for example the raw materials in the luxury watches. Sustainability is becoming more common and part of the luxury watch industry processes more.

-We use different raw materials like gold, diamonds and titanium in our products. Sustainability means for us that we track the sourcing of the materials as good as possible and want to expand that analysing and recycling also in the future, he explains.

Quality, passion and details

But what does the CEO do at home?

-I am a football fan and therefore it is a pleasure for me to work in collaboration with FIFA. This is a third World Cup for me. And when I am at home, I like to cook. Gastronomy is my hobby as well  You know: it is like watch making: quality, passion and details, he says.

© Päivi Härkönen, ComteamPUB+

Lifestyle Tech

FT: Luxury online Farfetch planning an US IPO

The British luxury online-retailer Farfetch is planning an US IPO. According to the Financial Times, the company has hired investment bankers from JPMorgan and Goldman Sachs to lead the offering. The company is selling brands like Gucci, Fendi and Valentino. The company nor the bankers did not comment the FT news.

This London based company is one of the few tech companies at the row valued more than billion dollars, the newspaper says. The luxury online markets have been growing steadily and for example last year the growth figures were double digit.

The companies in the markets are active and for example the Swiss luxury giant Richemont (CFR:SW)  announced in the late January a tender offet to buy Net-a-Porter (YNAP:MI), the word largest online luxury retailer. The Swiss company is planning to have the majority of the Milan based online-luxury retailer, while it owns 49 % of the platform at the moment.

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