French luxury goods group LVMH (Moët Hennessy Louis Vuitton), which completed the takeover of American luxury jewelry retailer Tiffany in a deal worth $15.8 billion this month, plans to restructure the latter’s vast merchandise lineup to focus more on gold and precious gems.
According to sources, the owner of Louis Vuitton plans to price its silver bangles to attract more affluent customers and also revamp the appearance of the jeweler’s stores and boost its presence in Europe and Asia.
“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,” said one of the sources.
Unlike such rivals as Richemont-owned Cartier and Van Cleef & Arpels, as well as fellow LVMH brand Bulgari, Tiffany’s products 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 a perfect 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 message to employees, 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,” he said.
The world’s biggest luxury goods, the LVMH group, was shaken by the COVID-19 pandemic and sales in airport stores plunged, but its biggest labels have stayed the course.
Takeover after a long battle
After a bruising court battle midway through the acquisition process, which ended with Tiffany and LVMH renegotiating the price tag slightly downwards, Mr. Arnault had soothing words for the US jeweler when he said that Tiffany’s resilience in recent months had exceeded LVMH’s expectations.
The group had previously called Tiffany’s prospects “dismal” due to poor management during the COVID-19 crisis.
Tiffany regained some ground through online sales and in China in its last quarter. Jewelry as a whole, one of the fastest growing luxury sectors in recent years, has resisted more than other areas during the pandemic.
Tiffany is less prevalent in the Asia-Pacific region, a major driver for luxury sales, which accounted for 28 percent of worldwide sales worth $4.4 billion in 2019. Europe stood at just 11 percent.