Luxury Goods

Luxury will fly only when travellers do

22 May 2020

Burberry and its fashion rivals face a summer of discontent. European stores are starting to reopen, and more bling is being sold in mainland China. But purchases by tourists won’t rebound for a while. Rising inventory is a sign that the current season is partly lost.

Birkin bags are Covid-19’s most resistant nemesis

23 Apr 2020

The pandemic appears to have hit $77 bln Hermes less than luxury peers Kering and LVMH. A Chinese sales rebound suggests refined appetites of its rich clientele remain undiminished. Investors are right in betting the French group will outpace rivals in riding out of the crisis.

Corona Capital: LVMH, L’Oréal, Pandemic bonds

16 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. LVMH holds onto the luxury of cash, cutting its dividend; L’Oréal makes the best of lockdowns with more than 50% growth in e-commerce sales in the first quarter; and even Covid-19 fails to trigger pandemic bonds.

Corona Capital: Lufthansa, JPMorgan, Foursquare

7 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: Lufthansa parks hopes of a quick airline-industry recovery in the hanger; JPMorgan skirts close to committing an early earnings faux pas; and Foursquare checks into the M&A market.

Corona Capital: Dining bonds

20 Mar 2020

Concise views on the pandemic’s corporate and financial fallout: Restaurant industry cooks up a unique form of funding to help alleviate revenue wipeout.

Dolce & Gabbana will toil to hit Versace’s heights

17 Feb 2020

The Italian brand has been approached by suitors. With sales of 1.4 bln euros, it would command a 4 bln euro price tag if sold on Versace multiples. Lower margins, coronavirus and an ongoing battle to fully restore its damaged image in China are reasons to be more cautious.

Moncler loyalty share plan sullies poster boy look

14 Feb 2020

The $11 bln down-jacket maker wants to double voting rights for long-term owners. That would give boss Remo Ruffini a stronger hand in talks with potential suitors. Weakening shareholder rights might however dent Moncler’s good public company image and irk investors.

Virus lockdown hands LVMH tricky start to 2020

28 Jan 2020

The $230 bln luxury group’s comparable sales grew 10% in 2019. But at least the current quarter could be rocky with the fallout from the new coronavirus likely to infect its hefty Chinese sales. That makes smooth progress towards its acquisition of Tiffany even more important.

China virus scare leaves bling giants exposed

21 Jan 2020

A deadly virus erupted ahead of the key Lunar New Year festival. Compared to the 2003 SARS crisis, the damage to luxury stocks looks modest. Yet Chinese shoppers now make up a third of the $310 bln market for high-end goods. If the disease spreads, the overall hit will be worse.

Richemont’s triple test to add share price sparkle

17 Jan 2020

The $46 bln Cartier owner weathered a hit to Hong Kong sales in the last three months of 2019. The shares are up 20% in the past year, but badly lag luxury rivals. To close the gap, the Swiss group must fend off LVMH-powered Tiffany and deliver on its costly online acquisition.

Hong Kong’s luxury icon sells new retail model

15 Jan 2020

Chow Tai Fook plans to close up to 15 of its local stores. The $11 bln jeweller’s decision comes at a moment of calm after months of protests and before a key shopping holiday. That suggests a recovery is distant. Tapping mainland shoppers elsewhere is the new way forward.

LVMH’s Tiffany swoop will trigger bling reprisal

13 Dec 2019

Bernard Arnault’s $230 bln luxury giant is racing ahead of its peers. But they won’t stand still. Kering will use M&A to cure its Gucci habit. Cartier-owner Richemont offers a better fit than possible target Moncler, provided the two can solve significant governance hurdles.

Moncler offers costly fix for Kering’s Gucci habit

5 Dec 2019

The French fashion conglomerate run by Francois-Henri Pinault may buy Remo Ruffini’s 11 bln euro puffer jacket maker. A deal would help Kering diversify away from its largest brand, but likely at a rich price. And extracting value from a company already at its peak would be hard.

LVMH can use Bulgari as model for Tiffany revamp

25 Nov 2019

The French luxury house has paid $16.2 bln to secure its U.S. jeweller rival. The final price tag is not too fanciful compared to past bling deals, but LVMH will still need to apply a lot of polish to make it stack up. Its past success at Bulgari gives much comfort.

LVMH’s new Tiffany proposal is hard to turn down

21 Nov 2019

The luxury giant upped its bid for the U.S. jeweller to $130 a share, or $16 bln with debt. That’s more than 30% above Tiffany’s price before Bernard Arnault popped the question. The valuation is a stretch for the faster-growing French group. Tiffany may not get a better offer.

Burberry checks right boxes on path to turnaround

14 Nov 2019

Strong demand for designer Riccardo Tisci’s new collections has helped the UK fashion group offset disruption at its Hong Kong hub. It expects sales in the Asian city to stay under pressure, but teaming up with Tencent to help a push into mainland China may offer some protection.

Richemont jewellery wealth dazzles Tiffany suitors

8 Nov 2019

The Swiss group’s weak first-half results mask the power of its Cartier and Van Cleef brands. The jewellers converted 33% of sales into operating profit, roughly double Tiffany’s margin. That gives rival LVMH a shiny target as it pursues a takeover of the American group.

Will a Tiffany bid give LVMH enough sparkle?

5 Nov 2019

Bernard Arnault’s luxury group is offering $15 billion in cash to take home the blue-box jewellery chain immortalised by Audrey Hepburn. The market is betting on a higher bid than the $120 a share on offer. But making a deal work will require a lot of polish.

Tiffany takeover needs a lot of LVMH polish

5 Nov 2019

To earn a positive return on its $15 bln bid in five years, Bernard Arnault’s group will have to lift the jeweller’s revenue growth and margin above its own, a Breakingviews calculator shows. That’s hard. Tiffany investors hoping for a higher offer are testing LVMH’s patience.

LVMH’s greatest gift to Tiffany could be privacy

1 Nov 2019

The U.S. jeweler may think Bernard Arnault’s $15 bln offer is stingy. But LVMH’s semi-private embrace might allow Tiffany to undertake the generous investments it needs, and which public investors are unlikely to welcome. Arnault could even bring shareholders along for the ride.