LVMH Watch and Jewelry Sales Up 30%

LVMH’s watches and jewelry business group benefited from sustained demand across all regions during the first half of 2011. Reported sales rose 30 percent to 576 million euros ($831 million). Organic revenue, when currency fluctuations and other nonrecurring events are removed, grew by 27 percent. It was the Paris-based luxury conglomerate’s top performer in terms of sales growth among its six business divisions.

Profit from recurring operations for the business group rose by a staggering 73 percent to 85 million euros ($122.6 million) for the first half of 2011.

By region, watch and jewelry sales for the period increased 52 percent in Asia, 29 percent in Europe, 28 percent in the U.S. and 8 percent in Japan. This business group is made up of Swiss luxury watch brands, Tag Heuer, Zenith and Hublot; Parisian timepiece and pen designer, Dior Montres; Parisian luxury jewelry houses FRED, Chaumet; and De Beers Jewellery (the diamond jewelry retail arm of the mining giant, which operates in a joint agreement with LVMH).

LVMH said TAG Heuer revenue grew significantly due to its automatic chronograph made with the 1887 caliber movement, a new women’s range of the Formula 1 line of timepieces, and the selective opening of TAG Heuer stores. At Hublot, the latest models from the King Power line were delivered with new Unico movements made by its manufacture. Zenith confirmed the strong demand of its new collections. Dior launched with “extraordinary success” the Dior VIII watch. Chaumet, FRED and De Beers all achieved good performances in their own store networks.

The watches and jewelry division makes up about 5.6 percent of LVMH’s total sales, but that is about to change soon as it absorbs Bulgari into its company. LVMH bought a 76.1 percent controlling stake in the Italian jewelry house in March and it is in the process of finalizing the transaction.

LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, divides its business into the following groups: Wine & Spirits, Fashion & Leather Goods, Perfume & Cosmetics, Watches & Jewelry, Selective Retailing and Other Activities. It’s brands from its divisions (other than jewelry and watches) include Moët & Chandon, Louis Vuitton, Guerlain, Sephora and Groupe Les Echos media group.

LVMH’s total revenue for the first half of 2010 was 10.3 billion euros ($14.8 billion), an increase of 13 percent. Organic revenue growth was 15 percent. All business groups contributed to this performance, “which is even more remarkable coming on top of the strong growth in the first half of 2010,” the company said. Sustained growth was reported in the U.S., Europe and Asia, despite the uncertain economic conditions.

Profit from recurring operations for the period, ended June 30, rose to 2.2 billion euros ($3.2 billion), an increase of 22 percent compared to the same period in 2010. Current operating margin reached 22 percent, an improvement on the first half of 2010. Group share of net profit increased 25 percent to 1 3 billion euros ($1.8 billion).

“LVMH’s excellent performance in the first half, once again, demonstrates the exceptional appeal of our brands, the attraction of our high quality artisanal products and the pertinence of our strategy,” said Bernard Arnault, LVMH chairman and CEO. “We approach the second half of the year with confidence and are relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market share gains in our historical markets as well as in high potential emerging markets.”

Slight Gain in Consumer Conference Index for July

Kim Kardashian shopping in Beverly Hills. Photo credit: FlynetPictures.com

The Conference Board Consumer Confidence Index, which had declined in June, improved slightly in July. The Index now stands at 59.5 (1985=100), up from 57.6 in June. The Present Situation Index decreased to 35.7 from 36.6. The Expectations Index rose to 75.4 from 71.6 last month.

“Consumer confidence posted a modest gain in July, the result of an improvement in consumers’ short-term outlook,” said Lynn Franco, The Conference Board Consumer Research Center director. “Consumers’ appraisal of current business and employment conditions, however, was less favorable as concerns about the labor market continue to weigh on consumers’ attitudes. Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated.”

Consumers' assessment of current day conditions weakened further in July. Those stating business conditions are “good” decreased to 13.4 percent from 13.7 percent, while those claiming business conditions are “bad” increased to 39 percent from 38.4 percent, according to the monthly report. Consumers’ appraisal of the job market was also less favorable. Those claiming jobs are “hard to get” increased to 44.1 percent from 43.2 percent, while those stating jobs are “plentiful” remained unchanged at 5.1 percent.

Consumers’ short-term outlook improved moderately in July. The proportion of consumers expecting business conditions to improve over the next six months increased to 17.7 percent from 16.5 percent. However, those anticipating business conditions will worsen also increased, to 15.2 percent from 14.9 percent.

Consumers were also mixed about the outlook for the labor market over the next six months. Those anticipating more jobs in the months ahead increased to 16.7 percent from 13.8 percent. However, those expecting fewer jobs also increased to 21.8 percent from 20.7 percent. The proportion of consumers anticipating an increase in their incomes rose to 15.7 percent from 14.1 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by The Nielsen Company. The cutoff date for July’s preliminary results was July 14.

De Beers Reports Record Rough Diamond Sales

Rough diamonds image courtesy of De Beers Group

De Beers Group said Tuesday that sales of rough diamonds during the first half of 2011 through the Diamond Trading Company (the rough diamond distribution arm of the De Beers) increased 33 percent, year-over-year, to $3.5 billion This is the highest ever sales figure recorded for the first half of the year, buoyed by continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America.

The company, which produces more than a third of the world’s rough diamonds, also reported record EBITDA of almost $1.2 billion, a 55 percent increase over the first the first half of 2010, reflecting the impact of “excellent” price growth during the period ended June 30. It predicts continued demand for the remainder of 2011.

“Sales during the period have been exceptional, driven mainly by continued growth in the Middle East, Indian and Asian retail markets and their impact on rough price growth,” De Beers said in a statement. Despite the ongoing turmoil with the global economy, we are encouraged by the continued strong growth in price and demand during the first six months of 2011. De Beers is confident that the exceptional growth in retail markets in India and Asia will continue to drive demand for diamonds.”

The company also said that reports from the recent jewelry tradeshows in Las Vegas “indicate that the all-important Christmas season in the U.S., and Diwali, are set to be strong.”

At a De Beers board meeting in Luxembourg on July 19, Philippe Mellier was appointed CEO of the De Beers Group. The company announced in May that he was being appointed. In the same meeting, Stuart Brown, CFO, said he would be resigning from the board, which will take effect at the end of July. He was with Be Beers for almost 20 years.

De Beers—which owns mines in South Africa, Botswana, Canada and Namibia—said it has continued to focus on efficiency improvements and on maintaining a lower sustainable level of overhead base, which it says has helped the bottom line. In the first six months of 2011, De Beers’ production totaled 15.53 million carats, an increase of 100,000 carats over the same period in 2010.

In its retail activities for the first-half of the year, Forevermark, the De Beers Group owned diamond brand, continues to expand into the retail markets of China, Hong Kong and Japan, and has recently launched in India, Singapore and the Caribbean. The brand is now available in a small number of stores in the U.S., with further expansion planned later this year. During the same period, De Beers Diamond Jewellers (De Beers’ joint venture with LVMH) announced the launch of the brand in China with the opening of its first mainland store in Beijing, its first store in Kazakhstan in Almaty and a new store in Dubai. The company will continue to expand in 2011 with in China and Hong Kong.
 
Element Six, De Beers Group industrial diamond group, “recorded a good first half performance in respect of both sales and profitability, with robust demand across its product ranges,” De Beers said in its earnings report. “Operating performance was impacted by, inter alia, operating challenges and a weak US dollar, but Element Six is well positioned for the remainder of the year.”

Swiss Watches Exports Up 19.3% led by Growth in Asia

The entrance to the main watch hall at Baselworld, the world's largest watch and jewelry fair held in Basel, Switzerland.  Photo credit: Anthony DeMarco

The Swiss watch brand is as strong as ever and shows no sign of losing its luster.

Following the recovery of 2010, watch exports in the first half of 2011 showed a year-over-year increase of 19.3 percent to 8.7 billion Swiss francs ($10.8 billion), according to the Federation of the Swiss Watch Industry (FH). Last year’s level was surpassed by more than 1.4 billion francs ($1.7 billion), placing the sector above 2008 export levels.

All of the Swiss watch industry’s main markets recorded a positive trend in the first half of the year. Asia (24.3 percent) increased at a higher rate than Europe (13.3 percent) or America (16.6 percent). It accounted for 54.4 percent of all Swiss watch exports.

Hong Kong was by far the largest market for Swiss watches for the first six months of the year, up 23.6 percent to 1.74 billion Swiss francs ($2.16 billion). The U.S. was the second biggest market up 19.6 percent for the period to 906.3 million Swiss francs ($1.1 billion). China moved up one place in the ranking after recording a 47.8 percent increase in growth (the highest increase across the board) to 715.1 million francs ($890 million). Singapore, South Korea and Thailand also made strong showings between January and June, the FH said. The Middle East also proved very attractive for Swiss watch manufacturers. Japan continued its gradual recovery and ended the half-year on a positive note despite the earthquake in March. In Europe, the positive assessment allowed for different interpretations according to markets. France continued to be influenced by products in transit and therefore recorded growth higher than the world average. Other markets on the Old Continent showed less marked changes.

All months showed double-digit levels of growth for the period. April and May exports rose by more than 30 percent. However, the FH warned that the strong Swiss franc is having a serious impact on margins for watch companies, forcing many to raise prices. However, even with this concern the industry forecasts sustained growth for the second half of the year.

Wristwatches made up the lion’s share of clock and watch industry exports. Their value amounted to 8.1 billion francs ($10 billion) in the first half-year, an increase of 19.6 percent compared to January-June 2010. This growth was supported by a high volume of timepieces. During the first six months of the year, Swiss manufacturers exported 14 million watches, an increase of 2.6 million units (22.5 percent) compared to the same period in 2010.

Gold watches played an important role in terms of growth by value, while in volume terms, steel and the category of other materials did most to underpin the general increase.

All price segments recorded double-digit growth, both in value and volume terms. The 200-500 franc category (export price) registered an increase of more than 30 percent, according to industry figures. Watches costing less than 200 francs accounted for more than 70 percent of exports in volume terms. Timepieces costing more than 3,000 francs showed a flat progression at a high level.

Other watchmaking products exported by Switzerland also recorded increases. Their overall value rose to 561.4 million francs (15.9 percent). Exports of movements saw their value increase by 9.9 percent, while alarm clocks and other clocks lost ground (-46.4 percent).

Hublot is Still Making Noise with its Big Bang Watches

Mathilde Krim, amfAR chairman, and Jean-Claude Biver, Hublot CEO, at the opening of the Hublot New York boutique on May 11. Krim is holding the Big Bang Magic amFAR timepiece.

A few years ago Swiss luxury watch company, Hublot, introduced its Million Dollar Big Bang watch, a tourbillon timepiece covered with diamonds. It was big hit, generating a great amount of press and interest and leading the company, headed by the flamboyant Jean-Claude Biver, to create other editions of the timepiece. Recently, the company unveiled several new pieces to the collection. They include the following:

Three Million Dollar Big Bang. This is a timepiece with blinding bling and superior function. The 18k white-gold bracelet, the visible parts of the watchcase and the dial are paved with more than 637 baguette diamonds, weighing more than 140 carats. The creation required 45 gemcutters and 2,000 hours of work by master gemsetters to cover this watch in diamonds. The watch also contains an in-house made caliber HUB 6003 manually wound tourbillon movement with off-centered time display.

Big Bang Leopard. For the ladies, there’s a version of the Big Bang that is feminine and wild. The strap is covered in a leopard print made of denim. The dial, in the same leopard print, is enhanced with yellow diamond hour markers. The case and bezel are made of 18k red gold. The bezel is set with smoked quartz, andalusites and citrine stones. The 41 mm watch contains an HUB4300 automatic chronograph movement.

Big Bang Black Caviar. Made entirely from ceramic, it is 30 percent lighter than steel. The watch is scratchproof, anti-allergenic, unalterable and rust-proof, including the crown and dial. The design is inspired by the One Million Dollar Black Caviar Big Bang (covered with more than 500 black diamonds weighing 34.5 cts.) using the concept of “invisible visibility,” designed to blend in to the background while still being visibly bold. It is bedecked in uniform shades of black with its ceramic reliefs designed, cut, beveled and polished like the baguette black diamonds of its more expensive sibling. The 41 mm diameter timepiece is equipped with an HUB1112 automatic mechanical movement. It has a date window at 3 o'clock and comes with a black rubber strap. It also has a 42-hour power reserve and is water resistant to 100 meters.

Big Bang All Black Carbon. Completely black, completely matt, and true to Hublot's concept of "invisible visibility," this is the first time that a Big Bang watch is made entirely from carbon fiber. Its black HUB4100 movement (black PVD, ruthenium and black gold coating) extends the all black carbon concept to the whole piece, for a light, stealthy look. It comes with a black alligator gummy strap with a black natural rubber inner surface.

Big Bang Magic amFAR. This is a 100-piece limited edition watch created to support the amfAR global struggle against HIV/AIDS. The design celebrates the organization’s 25th anniversary. The watch has a 44 mm black ceramic case and bezel and houses a self-winding chronograph movement and rubber-alligator strap with the amfAR colors and logo. Biver and amfAR founding chairman, Mathilde Krim, unveiled the watch at the opening of its New York City Boutique on May 11.

Swarovski Teams with Chamilia for Personalized Bead Collection

Swarovski Blue Brown Bracelet

It’s not often that the famed crystal company Swarovski partners with others. In fact, the Austrian firm that uses its brand to produce everything from crystal keepsakes to resort spas may never have been in a joint collaboration before in its 116 year history. This has now changed.

Swarovski Pink Drop Chain

Swarovski says it understands that fashion savvy consumers want to wear unique products that express their personality and style; so it has decided to join forces with Chamilia, the Minneapolis-based personalized jewelry company, to present a joint collection of beads that customers can mix and match to design their own creations.

The co-branded collection integrates Swarovski’s crystal faceting skills with Chamilia’s fashion sense, says Michael Paxton, Chamilia president and CEO. A total of 205 crafted beads have been designed with a range of colors and themes. The glow of precision cut crystal stones are enhanced with sterling silver, refined and on-trend, providing customers with many possibilities.

Swarovski Brilliance Green Earrings

The collection will be available beginning in August in approximately 400 Swarovski stores in the USA, Canada, Japan, Australia, U.K., Germany, France, Italy and Switzerland. With a price range from $30 to $100, the collection is designed to appeal to a variety of women.

Swarovski and Chamilia say it will be long-term collaboration.

The Second Act of Marina B

Marina B sapphire choker

The Midtown Manhattan headquarters of Windsor Jewelers is located on the 16th floor of a typical office building near Union Station. Inside the orderly, clean space there’s an area dedicated to Marina B jewelry. The brand was extremely popular with the jet-set crowd from the late 1970s to the mid-1990s, but for more than a decade has been left largely dormant. It is here in this office where much of the brand now resides in neatly organized boxes, binders, bound books and plastic containers and the work to re-launch it takes place.

Thierry Chaunu, Marina B director

Thierry Chaunu has been charged with bringing the brand back to life. The native of France has been a force in the luxury jewelry and watch industry for many years—serving in corporate leadership positions in some of the most well-known luxury goods companies in the world, including Leviev, Chopard, Christofle and Cartier.

Wearing a light brown casual suit, unbuttoned blue shirt on a hot humid July day, he talks about life beyond the corporate world, the enjoyment of being an entrepreneur and the challenge of working with this brand.

“What’s amazing with Marina B’s re-launch and reposition is that it is an iconic brand that has been a sleeping beauty for the past ten years or so,” Chaunu said. “To have an opportunity where I can represent something like this to the world, that’s what I find exciting.”

Marina B emerald Coeur earrings

In the office, he and Isabelle Kellogg, the high-energy public relations representative for the brand, take turns disappearing into nooks and crannies of the space and returning with books, binders and other materials that represent the brand, excitedly talking about each item even as they disappear to bring back something else. Inside a three-ring overstuffed black binder are the original jewelry drawings of Marina Bulgari, the founder and head designer of the Marina B brand. Another bulging, black, three-ring binder contains original jewelry molds, stored in zip lock plastic bags. A small closet space contains large bound books with magazine advertisements, editorial stories and other published works about the brand from all over the world. Categorizing the materials has been a major part of the operation.

Then there’s the white, man-size safe. Inside, are large plastic bins containing the original jewelry from the brand—again stored neatly inside zip lock bags. Several pieces are large 18k gold pieces that were made at a time when gold was trading at about $300 an ounce. Today, gold costs upward of $1,600 an ounce. So taking the current price of gold into consideration you’re talking about a five-fold price increase in cost without even accounting for the design and craftsmanship of each piece. They are basically priced out of the larger market and left for those who collect Marina B jewelry.

Marina B Fuji bracelet

Chaunu started the job in October 2010, not long after Windsor Jewelers CEO Paul Lubetsky purchased the brand from Saudi Arabian sheik of Jeddah, Ahmed Fitaihi, who bought the brand from Marina Bulgari in 1999. During that time it was sold primarily in his home country and had largely vanished from much of the Western world. Chaunu sees this as a positive in rebuilding the brand.

“The brand was pretty much left intact image wise,” Chaunu said. However, he noted that he was working with a “blank page.” He needed to decide what pieces of jewelry to recreate and had other questions about maintain the heritage of the brand. One of the first things he did was go straight to the original source of the brand: Marina Bulgari.

At 82 years of age, Bulgari is happily retired in Monaco. As her name implies, she was part of the iconic Italian jewelry house, Bulgari. She was the granddaughter of the company’s founder. She along with her sister, Anna, assumed central management and design roles within Bulgari. However, Marina famously left the company in 1976 shortly after her father died and two years later opened her first boutique in Milan. Her voluminous, bold, and colorful jewelry soon became the choice of movie stars like Sophia Loren, and other women of international society and best-dressed lists.

Chaunu and Marina Bulgari met in Milan in October 2010. He found her to be helpful and supportive.

“She is a fit, feisty woman with a very strong personality just like her jewelry,” he said. “She is a legend, one of the most prolific designers in the jewelry industry and it was fitting, I think, to meet with her and tell her what we are doing. She was very kind to give us encouragement and in some cases to indicate her favorite jewelry…. She couldn’t have been nicer. It will always be her baby and it’s important for her to know that it will be in good hands and that we will carry on the legacy.”

The re-launched jewelry brand was unveiled in February with basically two collections: A vintage line of the original Marina B pieces; and a line of recreated pieces from the original molds and drawings of Marina Bulgari, and manufactured in accordance with the brand’s original standards and produced by many of the original craftsmen.

The collections were showcased to the jewelry industry during the June tradeshows in Las Vegas. The response was positive, according to Chaunu. In fact, Neiman Marcus will be showing the collection in nine of its stores.

“They loved it and embraced it because there’s nothing like that in the market today as elegant and bold," he said.

In addition, an exhibition of Marina B vintage pieces will go on a tour of Neiman Marcus stores. It will include one-of-kind pieces, some of which have been purchased at auction and estate sales by Lubetsky. The company is also keeping a single piece of each vintage jewelry line that will be included in the exhibition, along with the larger gold pieces mentioned earlier whose value have surpassed the marketplace.

The exhibition is a way to show consumers the heritage of the brand. Another way the company is doing this is to include a famed reproduction of the Marina Bulgari drawing of the jewelry piece they purchased.

“They’re buying a heritage and a piece of tradition,” he said. “We feel that it’s a show of appreciation to the clientele who will value this as a piece of history and proof of the heritage of this piece.”