Editor’s Note
This article examines the ongoing challenges of post-merger integration at Tiffany & Co. following its landmark acquisition by LVMH. While sales have grown, it highlights internal tensions, particularly regarding sales targets and staff compensation, that can arise when blending corporate cultures.
The mega-acquisition three years ago caused a global sensation, with LVMH Group achieving the takeover of the American luxury jewelry brand Tiffany. LVMH Group founder and chairman Bernard Arnault led the charge.
However, the integration has not been smooth. Although Tiffany’s sales have achieved considerable growth post-acquisition, recently departed brand sales staff claim the company set them unattainable sales targets, meaning their actual commissions were lower than before. This has led to a significant number of salespeople leaving Tiffany for competitors, taking some customers with them.
These personnel changes have undoubtedly increased internal turbulence within the company as Tiffany strives to adapt to the LVMH Group.
Tiffany’s current challenges are a test of Bernard Arnault’s acquisition strategy. The French entrepreneur has built his vast luxury empire by acquiring well-known brands, polishing them, and revitalizing their value to boost sales.
Tiffany is now on this path, with annual sales increasing by $1.5 billion since its acquisition by LVMH in 2021.
He has shown his commitment by assigning his son Alexandre to assist Tiffany CEO Anthony Ledru in driving brand growth, viewing it as a test for Alexandre. Arnault has placed all five of his children in key positions within his empire.
Recent sales setbacks and frequent personnel changes have increased the pressure on Alexandre, who must accelerate Tiffany’s transformation. The 32-year-old previously orchestrated high-profile marketing campaigns featuring Beyoncé, Jay-Z, and K-pop star Jimin from BTS, boosting the brand’s international profile and allowing for price increases.
The Manhattan flagship store contributes one-tenth of Tiffany’s annual sales. Underperformance there could hinder Tiffany’s expected growth rate and its contribution to parent company LVMH’s sales.
LVMH’s financial report released on July 23 showed a 3% drop in first-half operating income to €5.2 billion for the Watches & Jewelry division housing Tiffany and Bvlgari, with a 4% decline in Q2 to €2.7 billion.
Tiffany stated that sales at its Manhattan flagship have quadrupled since the LVMH acquisition. From its reopening in April 2023 through May 2024, it was LVMH’s best-performing single-brand store.
While LVMH doesn’t disclose individual brand sales, Stifel Financial analyst Rogerio Fujimori estimates Tiffany’s Q2 revenue declined about 3% year-on-year, similar to the previous quarter’s expected drop.
In contrast, rival Richemont, owner of Cartier and Van Cleef & Arpels, reported 4% sales growth in its jewelry division.
Tiffany is losing market share in the high-net-worth client segment. According to Euromonitor International, Tiffany’s share of the global luxury jewelry market decreased by about 0.7 percentage points in 2023, while Cartier’s share increased by four percentage points.
Tiffany is strengthening its jewelry collections, upgrading stores, and investing more in marketing. Fujimori expects Tiffany to achieve 1% to 2% growth this year, about half of Richemont’s jewelry division.
Challenges for the Arnault family are evident at Tiffany’s Fifth Avenue flagship, famous since the 1961 film “Breakfast at Tiffany’s.” After a $350 million renovation and reopening in April 2023, LVMH renamed it “The Landmark.”
The timing may not have been ideal. Post-pandemic spending sprees have faded, and persistent inflation is curbing consumer desire. Despite summer, employee performance continues to fall short, a trend likely extending into autumn.
At the end of 2023, confident for the holiday season, the brand set a December sales target exceeding $60 million, double the previous year’s roughly $30 million, according to insiders. Employees were shocked. Pre-acquisition, targets typically increased 5% to 10% annually; a 100% hike seemed unattainable.
Ultimately, staff sold $50 million worth of goods—the flagship’s highest sales in years, setting a record for The Landmark, though still missing the target.
The Fifth Avenue store continued underperforming in 2024, missing its monthly target of about $25 million in Q1, as did other US Tiffany stores.
After a year of poor performance and low commissions, some employees joined competitors like Cartier or Harry Winston. Industry sources say about three-quarters of sales staff left in the past year. While retail has high turnover due to relatively low pay and long hours, consultancy Milton Pedraza estimates average attrition around 50%; Tiffany’s rate is clearly higher.
A Tiffany spokesperson said sales targets reflect “business growth, increased retail space, and expanded product assortment.”
To address flagship turnover, LVMH brought in salespeople from other brands and hired some without jewelry experience, disappointing Tiffany staff who value jewelry expertise.
The spokesperson said employee turnover and moves to competitors are “commonplace on both sides, nothing new.” Given The Landmark’s size and diverse products, the company hires from all luxury retail sectors. The flagship has over 350 employees.
Pre-acquisition, Tiffany invited about 100 VIC (Very Important Client) guests annually to a resort for three to four days, requiring a minimum spend of $100,000 per person. Last year, Tiffany held more VIC events over several weeks to include more clients.
It also encourages flagship and other store staff to sell more high jewelry, priced from $75,000 to millions. This spring, Tiffany held “culture of elevation” training, educating employees on Tiffany’s history and iconic collections like Lock and Tiffany T.
The spokesperson said top 20 client advisors saw income increases up to 75% year-on-year, with extra vacation week and higher commissions on expensive items. The strategy is attracting more high-end clients and enabling more high jewelry sales.
Bernard Arnault appears particularly patient with Tiffany’s performance.
