PARIS — Bernard Arnault just bagged his biggest luxury acquisition ever — indeed, the sector’s largest — and he is already rolling up his shirtsleeves.
“There is a lot of improvement to do — as there is in general for a number of brands — for the stores, the design of certain stores could certainly be improved,” said the chairman and chief executive of LVMH Moët Hennessy Louis Vuitton, speaking to WWD.
LVMH announced early Monday it had sealed an agreement for a $16.2 billion deal for Tiffany & Co. and sent out greetings from the French luxury magnate to the jeweler’s 14,200 employees that afternoon.
“Our goal is to provide Tiffany with the ideal environment to further invest and grow,” Arnault wrote in the letter, noting the idea was to ensure that the long-term development of the storied jewelry label remains “fully aligned with its unique identity and heritage.”
To tackle the challenge of drawing on Tiffany’s past to build relevance with new generations, LVMH executives say bringing it into the group will help shield it from the short-term pressures of being publicly listed.
“I have great admiration and respect for the brand — it’s perhaps one of the only truly historical American luxury brands,” said Arnault.
“I think brands like this suffer from being listed in the U.S. because of the constant pressure on short-term profitability — I am not against profitability, of course, on the contrary — but I think in order to increase its desirability, you have to think long term,” Arnault said. “I always say to my teams that the most important thing, when you arrive at the office in the morning, is to think of the desirability of the brand for which you are responsible, and that it must be even stronger in 10 years.’’
Financial success will follow, he posited.
“Economic results are a consequence and not an objective,” Arnault said.
LVMH executives have outlined plans to focus on product pillars from the jewelry collections, both adding new ones and drawing on existing styles. As examples, they cited key-themed jewelry, engagement settings dating back to the late 19th century and the minimalist Tiffany T collection — which was introduced in 2015 by Francesca Amfitheatrof, who now designs jewelry for LVMH’s star luxury label Louis Vuitton, and steered that brand’s entrance into the realm of high jewelry.
Asked about his vision for creative direction at Tiffany, Arnault said it was too early for him to discuss.
“I haven’t gone into the details of existing collections yet and I haven’t met the teams yet — I haven’t actually worked with them yet,” he said.
Since 2016, Tiffany’s creative direction has been headed by Reed Krakoff, who formerly designed leather goods for Coach. Krakoff’s first jewelry collection, called paper flowers, carried a stylized floral theme, meant to brush away formality in a bid to appeal to younger consumers.
The brand’s efforts to woo younger clientele have extended to advertising stunts like outfitting skateboarders to perform tricks in the house’s iconic, robin-egg blue and covering New York subway stations in Tiffany blue.
Since the announcement of the takeover, which is expected to take place in mid-2020, LVMH executives have publicly sidestepped the issue of potential management changes, except to say that the company has a ‘’very sound and logical strategy,’’ as told by chief financial officer Jean-Jacques Guiony in a conference call with analysts Monday.
Tiffany’s chief executive officer Alessandro Bogliolo, who headed Bulgari when it was taken over by LVMH in 2011, has been seeking to position the house as the “next-generation luxury jeweler.” Earlier this month, he tapped Daniella Vitale, the former ceo of Barneys, to become Tiffany’s chief brand officer. And he has been focusing on consumers in Mainland China, a market it first entered in 2001, with plans to upgrade its network of 35 stores there. The brand also recently took hundreds of pieces from the archives to show in Shanghai, re-creating the famed Fifth Avenue flagship, which is being renovated, for the exhibit.
“I haven’t seen the details yet, but I imagine it’s good, and that other stores in the U.S., like those in European countries or in Asia, could benefit from what they will do on Fifth Avenue — a bit like what we did at Bulgari,” said Arnault.
“We completely redid it. And frankly, it’s much more attractive I think now, than it was before — these are the kinds of things we can do,” he added.
Bulgari reopened its Fifth Avenue flagship — which sits across the street from Tiffany — in 2017, after a year and a half, multimillion-dollar renovation. Covered with a rosetta mesh facade, it was designed by architect Peter Marino who was inspired by a bracelet clasp from the Thirties.
With Louis Vuitton on another corner of Fifth Avenue and 57th Street, LVMH dominates the intersection. One had to ask.
“We’ve got three corners out of four — you want me to buy the fourth?” laughed Arnault. No, he’s not planning to buy Bergdorf Goodman, he said. There is a French expression, “never two without three,” but not one that says “never three without four,” Arnault added.
In addition to the challenge of building Tiffany’s resonance with new generations of consumers, the French luxury group will also have to navigate cultural differences.
It has not always been easy for LVMH in the U.S., where it has struggled to put Marc Jacobs on the right footing, and spent 15 years trying to transform Donna Karan into an American luxury brand before selling it in 2016.
“The market is different in the U.S.,” acknowledged Arnault.
But with Tiffany, which he considers a true luxury brand, it is a different story, he said.
“Donna Karan, I would say, was too far from real European luxury — it’s a magnificent American sportswear brand, but perhaps too far from our criteria,” said Arnault.
The executive pointed to the group’s experience with local teams for other brands — including Louis Vuitton, which is managed from New York and recently opened workshops in Texas, and its beauty retailer Sephora, which gradually built up its teams in the U.S. and is managed from San Francisco.
“On the other hand, when we have set up in the U.S. we have had some remarkable successes. Sephora, which had a bit of a difficult time in the U.S. in the early 2000s, is now considered one of the biggest successes in retail for cosmetics — we are number one in the American market,” he said.
In a sign the luxury executive has no intentions of slowing down, Arnault evoked his favorite tennis star.
“Like my friend Roger Federer — he has the lead but he wants to keep progressing. He keeps training, and so do I,” said the luxury executive.