Editor’s Note
LVMH Chairman Bernard Arnault highlighted Tiffany’s remarkable post-acquisition growth, noting its 2023 operating profit tripled compared to pre-acquisition levels. This underscores the brand’s pivotal role in driving the luxury group’s performance.
During a recent earnings call with securities analysts, Bernard Arnault, Chairman and CEO of LVMH, mentioned:
Within LVMH’s entire Watches and Jewelry division, Tiffany’s performance is undoubtedly leading.
According to the group’s newly released 2023 fiscal year performance report, LVMH achieved a full-year operating profit of 22.802 billion euros (approximately 174.941 billion RMB), an 8% year-on-year increase at constant exchange rates. The Watches and Jewelry department achieved an operating profit of 2.162 billion euros (approximately 16.587 billion RMB), a 7% year-on-year increase.
The overall growth of the global personal luxury goods market slowed in the second half of 2023. This phenomenon was reflected in the sales performance of leading luxury companies like LVMH, Swiss Richemont Group, and Chanel in the third and fourth quarters, and even the full year of 2023.
Growth slowdown affected almost all personal luxury categories including ready-to-wear, handbags, beauty, jewelry, and watches. After deducting sales and general administrative expenses, the operating profit growth rate for LVMH’s Watches and Jewelry department in 2022 exceeded 20%. By 2023, this figure had dropped to single digits. The downturn in the diamond market in 2023 also directly negatively impacted the entire Western jewelry retail industry.
Against this backdrop, Tiffany’s growth performance in 2023 still far exceeded that of its business division. In fact, Bernard Arnault mentioned in an interview with The Wall Street Journal in April 2023 that Tiffany had already doubled its operating profit in the second year after the acquisition.
Bernard Arnault repeatedly stated during the earnings call.
After acquiring Tiffany, LVMH rapidly advanced the renovation of the brand’s boutiques and the upgrade of its retail network in major global regional markets. Several boutique renovation and upgrade projects were completed and opened in 2023, the most iconic being the reopening of Tiffany’s New York Fifth Avenue flagship store, “the Landmark.” This renovation project is LVMH’s largest single-store renovation investment to date. According to Tiffany CEO Anthony Ledru, the investment amount was
The new Tiffany New York flagship store has also become an important reference for the new design and visual concepts of other boutiques. Following closely, the Tiffany Ginza store in Tokyo, which underwent a five-year renovation, also reopened. While following the overall design style of the New York flagship, the store incorporated hand-painted Japanese cherry blossoms on its exterior and main interior walls, highlighting local elements.
By December 2023, Tiffany’s new boutique at Shanghai’s Qiantan Taikoo Li also officially opened. This large two-story boutique is located in the center of Qiantan Taikoo Li, opposite the Dior boutique. The interior continues the latest style of the New York flagship but uses materials to create a brighter visual. The store’s facade is decorated with 6,988 3D-printed diamonds, a visual element unique to the Chinese market so far. Meanwhile, several older Tiffany boutiques in China are undergoing renovations, including the Tiffany Chengdu Taikoo Li flagship store.
The reopening of the Tiffany New York Fifth Avenue flagship store became the brand’s biggest topic of the year. Radiating from New York to major regional markets globally, according to group executives, it also brought Tiffany a good long-tail effect throughout the year.
Bernard Arnault said at the meeting.
While actively expanding and upgrading stores, LVMH is also meeting market demand for Tiffany’s growth through upstream acquisitions. In November 2022, LVMH announced the acquisition of the Italian jewelry manufacturer Pedemonte Group, formed by the merger of several independent boutique jewelry workshops, which had long been a jewelry supplier to LVMH. This strategic acquisition aims to help LVMH’s jewelry brands
Tiffany’s positioning within LVMH is very clear: to help LVMH capture jewelry market share alongside Bulgari. Expanding production capacity and broadening the global retail network are aimed at capturing a larger share of the high jewelry market.
However, LVMH is not alone in this. Its competitor Richemont is also continuously investing in building factories for its high jewelry brands Cartier, Van Cleef & Arpels, and Buccellati. To date, the high jewelry market performers remain Richemont’s Cartier and Van Cleef & Arpels.
During the recent Q3 FY2023/24 (Q4 2023 calendar year) earnings conference, Richemont’s CFO Burkhart Grund told the media that Cartier and Van Cleef & Arpels had further expanded their global high jewelry market share. Moreover, these two brands captured market share from competitors and also took some share from the non-branded jewelry market.
Bernard Arnault discussed competitor Richemont on the aforementioned analyst call, calling it
He believes that among the world’s strongest jewelry brands, besides Cartier and Van Cleef & Arpels, Tiffany and Bulgari also hold two spots,
As for the future, the world’s richest man said,