Latest news with #LucaSolca
Business Mayor
19-05-2025
- Business
- Business Mayor
Wealthy shoppers are splashing the cash on jewelry — so long as it's the right brand
A shopper passes a jewelry display in the window of a Van Cleef & Arpels luxury goods store, operated by Cie. Richemont SA, on via Montenapoleone in Milan, Italy. Bloomberg | Getty Images With a diamond encrusted ring here and a rare gemstone necklace there, the world's wealthiest are continuing to adorn themselves with the finest jewelry even as broader luxury shoppers pull back. But make no mistake, one mother-of-pearl bracelet is not to be confused with another. As the super rich grow even more selective, increasingly only the best will do. That spells positive news for Swiss luxury group Richemont , which boasts some of the luxury jewelry market's most sought-after brands, including Van Cleef & Arpels, Buccellati and Cartier. 'Richemont's jewelry brands are really at the top of consumer desirability,' Luca Solca, sector head for global luxury goods at Bernstein, told CNBC's 'Squawk Box Europe.' 'There's no debate. Despite the efforts by LVMH to challenge this leadership, I think that other brands are clearly behind.' Richemont on Friday reported better-than-expected fiscal fourth-quarter sales, led by 11% growth within its Jewellery Maisons division. For the full year, jewelry was also the group's strongest segment, growing 8%. The results round off a results season in which major luxury names from LVHM to Kering and Burberry reported a slowdown in sales in the quarter to March, dashing earlier hopes of a turnaround in the embattled sector. Sales within LVMH's watch and jewelry division, specifically, were flat year-on-year in the first quarter, having declined 2% on an organic basis in 2024 amid softer demand for key brands such as Tiffany & Co, Bvlgari, TAG Heuer and Hublot. 'We are gaining market share in jewelry, from branded and non-branded companies,' Richemont's chairman Johann Rupert said during an earnings call Friday. Watches fall out of fashion Despite the continued allure of its jewelry brands, however, Richemont is not entirely immune to wider sectoral headwinds. The performance of its Specialist Watchmakers division, which features Piaget and Roger Dubuis, paints a more nuanced picture. Richemont's watch sales fell 13% in 2024, led primarily by weakness in China. That rate of decline eased only slightly in the second half of the year, thanks to recovering strength in the Americas. 'The global watch market experienced a slowdown affecting volumes. This was led by demand weakness in China, with greater resilience of high-end price segments,' the company said in its report. Everybody and their dog has bought a watch out of Covid-19 and that will take a while to digest. Luca Solca sector head for global luxury goods at Bernstein Clouding the picture further, many other premium Swiss watchmakers including Rolex, Patek Philippe and Audemars Piguet, are privately owned, making their performance difficult to decipher. Macroeconomics aside, however, Bernstein's Solca said the fundamental nature of the luxury watch market — where products are typically positioned as long-term, if not lifetime, purchases — inevitably makes it slow to rebound. 'Everybody and their dog has bought a watch out of Covid-19 and that will take a while to digest. So I expect watches to be on the backfoot for a while longer,' he said. 'People buy jewelry more frequently, and jewelry has become also cheaper relative to handbags last year, hence the better dynamic in that category.' Read More Holidaymakers face big rise in car hire costs abroad this summer Possible headwinds The growth of the high-end jewelry market versus other haute couture staples such as fashion and leather goods could stand Richemont in good stead amid resurging global trade headwinds. Richemont's Rupert said Friday that the company would not take price increases that it cannot sustain, contrasting warnings of prices rises from other luxury and jewelry players. Cartier, a unit of Cie. Richemont SA, luxury watches sit on display in a store front. Bloomberg | Getty Images 'The business is increasingly reliant on its jewellery arm and will hope the strength of its brands in this area will sustain it,' Russ Mould, investment director at AJ Bell said in a note Friday. Nevertheless, analysts warn that the company may yet face challenges that threaten market dominance. 'Richemont continues to face several significant headwinds including the strength of the Swiss franc against the dollar, higher gold prices and the impact of tariffs,' Mould added.
CNBC
18-05-2025
- Business
- CNBC
Wealthy shoppers are splashing the cash on jewelry — so long as it's the right brand
With a diamond encrusted ring here and a rare gemstone necklace there, the world's wealthiest are continuing to adorn themselves with the finest jewelry even as broader luxury shoppers pull back. But make no mistake, one mother-of-pearl bracelet is not to be confused with another. As the super rich grow even more selective, increasingly only the best will do. That spells positive news for Swiss luxury group Richemont, which boasts some of the luxury jewelry market's most sought-after brands, including Van Cleef & Arpels, Buccellati and Cartier. "Richemont's jewelry brands are really at the top of consumer desirability," Luca Solca, sector head for global luxury goods at Bernstein, told CNBC's "Squawk Box Europe." "There's no debate. Despite the efforts by LVMH to challenge this leadership, I think that other brands are clearly behind." Richemont on Friday reported better-than-expected fiscal fourth-quarter sales, led by 11% growth within its Jewellery Maisons division. For the full year, jewelry was also the group's strongest segment, growing 8%. The results round off a results season in which major luxury names from LVHM to Kering and Burberry reported a slowdown in sales in the quarter to March, dashing earlier hopes of a turnaround in the embattled sector. Sales within LVMH's watch and jewelry division, specifically, were flat year-on-year in the first quarter, having declined 2% on an organic basis in 2024 amid softer demand for key brands such as Tiffany & Co, Bvlgari, TAG Heuer and Hublot. "We are gaining market share in jewelry, from branded and non-branded companies," Richemont's chairman Johann Rupert said during an earnings call Friday. Despite the continued allure of its jewelry brands, however, Richemont is not entirely immune to wider sectoral headwinds. The performance of its Specialist Watchmakers division, which features Piaget and Roger Dubuis, paints a more nuanced picture. Richemont's watch sales fell 13% in 2024, led primarily by weakness in China. That rate of decline eased only slightly in the second half of the year, thanks to recovering strength in the Americas. "The global watch market experienced a slowdown affecting volumes. This was led by demand weakness in China, with greater resilience of high-end price segments," the company said in its report. Clouding the picture further, many other premium Swiss watchmakers including Rolex, Patek Philippe and Audemars Piguet, are privately owned, making their performance difficult to decipher. Macroeconomics aside, however, Bernstein's Solca said the fundamental nature of the luxury watch market — where products are typically positioned as long-term, if not lifetime, purchases — inevitably makes it slow to rebound. "Everybody and their dog has bought a watch out of Covid-19 and that will take a while to digest. So I expect watches to be on the backfoot for a while longer," he said. "People buy jewelry more frequently, and jewelry has become also cheaper relative to handbags last year, hence the better dynamic in that category." The growth of the high-end jewelry market versus other haute couture staples such as fashion and leather goods could stand Richemont in good stead amid resurging global trade headwinds. Richemont's Rupert said Friday that the company would not take price increases that it cannot sustain, contrasting warnings of prices rises from other luxury and jewelry players. "The business is increasingly reliant on its jewellery arm and will hope the strength of its brands in this area will sustain it," Russ Mould, investment director at AJ Bell said in a note Friday. Nevertheless, analysts warn that the company may yet face challenges that threaten market dominance. "Richemont continues to face several significant headwinds including the strength of the Swiss franc against the dollar, higher gold prices and the impact of tariffs," Mould added.
Mint
16-05-2025
- Business
- Mint
For luxury brands, there are no replacements as China and the US falter
Even though both countries have 1.4-billion strong populations, mainland China has more than 60 Louis Vuitton stores while India has only three. Designer brands' struggles in India are a reminder of just how difficult it can be to find new growth markets. That search is taking on new urgency, as the two biggest drivers of demand in the luxury goods industry, China and the U.S., are in the doldrums. Together, Chinese and American shoppers generate around half the sector's sales. But demand from Chinese consumers has been muted for four years. The country's deflating property bubble has wiped 30% off Chinese household wealth, according to Barclays Private Bank, lessening the appetite for luxury goods. U.S. luxury sales peaked in early 2022 and have tailed off since. A delicate recovery in spending seen late last year was snuffed out by the tariff war. LVMH, the world's biggest luxury-goods company by revenue, said sales in the U.S. fell 3% from a year earlier in the first quarter. Although it doesn't break out China, sales fell more than a 10th in Asia. And 2025 is shaping up to be a lost year for the luxury industry, with global sales expected to dip 2%. Brands and their shareholders got used to two decades of reliable 6% annual growth, so they are naturally eager to find the next hot market. But it will be hard for luxury companies to reduce their dependence on Chinese and American consumers, as they need such specific elements to thrive. If luxury bosses were able to build an ideal market for their products from scratch, the local economy would be growing rapidly. This creates a pool of ultrawealthy spenders. 'The ingredients [for a luxury boom] are the same every time," says Luca Solca, analyst at Bernstein. 'You have a group of top consumers getting a lot richer who are interested in separating themselves from the crowd, so they buy luxury goods." But there shouldn't be too much wealth inequality. When middle-class consumers are also getting richer, some will try to keep up with the Joneses by spending on designer goods. Top brands have a reputation for catering to the superrich, but more than 50% of global luxury sales come from hundreds of millions of middle-class shoppers who spend less than 2,000 euros a year on luxury goods, equivalent to $2,240 at current exchange rates. 'The two markets coexist in a symbiotic relationship," says Filippo Bianchi, a managing director at Boston Consulting Group. 'Spending by the wealthiest shoppers, that money is always there. But the bottom half is driven by GDP and what is happening to people's salaries." This is what made China such an amazing market for luxury goods. Between 2009 and 2019, its economy grew 8% a year on average. As China's rich got richer and its middle class swelled, both turned to Western luxury goods to signal they were moving up in the world. Back in 2000, Chinese customers generated 1% of global luxury sales, according to UBS. Today they account for around a quarter. The country also urbanized rapidly, so luxury brands were able to advertise and retail efficiently to tens of millions of city dwellers. And middle-income consumers were pressed up against the ultrarich, creating status hunger. Compare that with India, where only a third of the population lives in cities. India is the market that divides opinions the most among luxury industry analysts. It has been one of the fastest-growing economies in the world for several years, so some brands think it is only a matter of time before middle-class Indians want Chanel handbags and Cartier bracelets. But the Indian market has underperformed expectations so far. Reasons cited include a supposedly less individualistic culture and strong local clothing and jewelry brands. Today, luxury brands sell goods worth $1 billion inside India, compared with $45 billion in mainland China, says Federica Levato, a senior partner at consulting firm Bain & Company. A country's retail infrastructure can also be a deal breaker for brands. For now, luxury brands sell their goods in the lobbies of five-star hotels in India. But an area equivalent to London's Bond Street or New York's Fifth Avenue where they could open flagship stores hasn't developed yet in major cities. According to Ashok Som, co-author of 'The Road to Luxury," India's population of 1.4 billion is served by just eight luxury shopping malls. High import taxes, which add around 50% to the price of goods such as designer handbags, mean India's high-net-worth individuals do their luxury shopping abroad. Unless middle-class Indian consumers start buying luxury goods at home in big numbers, investment in high-end retail won't happen. That in turn further holds back spending. Luxury brands can try to coax more cash from local Europeans. But the region's shoppers aren't in an indulgent mood. 'The European economy has been stagnant for years versus China and the U.S.," says Bernstein's Solca. 'Consumers only buy luxury goods when they think 'I can spend a lot today because tomorrow I will be richer.'" Saudi Arabia is another market that luxury brands are watching, even though they aren't all-in yet. Half a million square meters of luxury retail space is being developed over the next decade, in a punchy bet that locals will do more luxury shopping at home rather than in London or Paris, and that there will be an influx of high-spending expats and tourists. Even if that goes according to plan, luxury sales in the Saudi market will only be the same size as Germany's, says Boston Consulting Group. With no obvious alternative to China or the U.S., brands might try to lure back middle class consumers in these markets to jump-start growth. A report from Bain shows the luxury industry has lost 50 million customers since 2022, partly because hefty price increases put their goods out of reach for aspirational customers. Today, the lowest-cost women's sneakers on Gucci's U.S. website were $790. Back in 2020, the most affordably priced pair cost $550, the Wayback Machine shows. The solution to the luxury industry's growth problem probably doesn't lie in new emerging markets. What the brands really need is a re-emergence of middle-class spending in the U.S. and China. Write to Carol Ryan at
Yahoo
25-04-2025
- Business
- Yahoo
Kering Shares Fall 6% After Weak Q1 Results
Shares in Kering slumped as much as 6 percent in early trading Thursday on the Paris bourse as investors digested its 14 percent decline in first-quarter revenues, and a 25 percent drop at its star brand Gucci. The numbers came in about 3 percent below consensus expectations, and represent a deceleration from the fourth quarter of 2024, when Kering sales fell 12 percent. More from WWD Kering 'Fully Mobilized' to Fix Gucci, CEO Tells Shareholders Louis Vuitton Has Bumped Up Handbag Prices in the U.S. Kering Reports 14% Sales Drop, Demna to Unveil First Gucci Designs in September In a research note Thursday, Deutsche Bank lowered its full-year earnings per share forecast by 13 percent 'given the [first quarter] miss and more cautious outlook for [first half] from management.' During a conference call on Wednesday to discuss the results, Kering executives were on the hot seat and assured prompt action to improve Gucci's fortunes, including revving up its supply chain to speed new and improved leather goods to the market. Last month, Kering said Balenciaga's star designer Demna would become the new artistic director of Gucci, tasked with jolting the Italian fashion house out of its doldrums with a gust of strong creativity. He is expected to deliver the first 'hint' of his vision this September, as reported. Kering is to host its annual general meeting at 3 p.m. Paris time on Thursday. Europe's other main luxury players saw smaller dips in their share prices: down 1.4 percent at Compagnie Financière Richemont, 0.8 percent at Hermès International and 0.3 percent at LVMH Moët Hennessy Louis Vuitton. According to Bernstein analyst Luca Solca, a recovery in Chinese demand will be key to any recovery for Kering in the second half. 'Management admits it has little visibility on this factor. This [second half 2025] trajectory will depend partly on an improvement in the macroeconomic setting (in addition to specific initiatives by Gucci), which also remains uncertain,' he wrote. On Wednesday, Kering reported double-digit declines across all regions in the first quarter of the year, with Asia-Pacific down 25 percent, in line with the last three months of 2024, the company noted. Best of WWD Harvey Nichols Sees Sales Dip, Losses Widen in Year Marred by Closures Nike Logs $1.3 Billion Profit, But Supply Chain Issues Persist Zegna Shares Start Trading on New York Stock Exchange Sign in to access your portfolio
Fashion United
24-04-2025
- Business
- Fashion United
Louis Vuitton raises U.S. handbag prices amid tariff concerns
Louis Vuitton has quietly raised the prices of several handbags in the United States— a move analysts interpret as a preemptive response to the threat of U.S. tariffs on European imports. The adjustment comes on the heels of Hermès' announcement earlier this month that it will implement a 10 per cent price increase. According to a recent price comparison on the French luxury house's U.S. website, some handbags have risen by as much as 4.8 per cent, with others seeing increases in the range of 3.6 per cent. One of the most noticeable hikes was seen in the Neverfull GM in monogram-coated canvas, now retailing for 2,200 dollars, up 100 dollars from the previous week, reported Business Insider. In a note to investors on Wednesday, Luca Solca, luxury sector analyst at Bernstein, interpreted the move as a calculated hedge against the uncertain trade environment. 'A price increase of +3.6 percent seems more than enough to cover even the worst case scenario of 20 percent tariffs on EU exports to the US,' Solca noted, referring to growing concerns that transatlantic trade tensions could escalate further. The United States represents a vital revenue stream for LVMH, the parent company of Louis Vuitton, contributing 24 percent of group turnover in the most recent quarter. The U.S. market's importance underscores the strategic rationale behind price adjustments that seek to preserve margins in the event of trade disruptions. Interestingly, not all Louis Vuitton products were affected by the price increases. Industry observers suggest that bags and accessories produced at LVMH's three U.S.-based workshops and manufacturing facilities may have been spared due to their domestic origin, making them less vulnerable to import duties. This selective pricing approach also reflects a broader trend in luxury: brands are increasingly localising production to mitigate geopolitical risk and streamline logistics, particularly in key growth markets like the U.S. While Louis Vuitton has not made a formal announcement regarding the price changes, the timing and selectivity of the increases are unlikely to be coincidental. As trade relations between the U.S. and the EU continue to evolve, luxury houses such as Louis Vuitton are already adjusting their strategies to protect profitability without sacrificing demand. Whether American consumers—already accustomed to annual price increases from the French luxury brand—will react differently to this latest adjustment remains to be seen. But with handbags continuing to serve as core entry points into the luxury market Louis Vuitton's pricing strategy is likely to remain under close scrutiny.
