Wednesday, March 9, 2011

Jewelry Biz - Bernard Buys Bulgari For Big Bucks

Bernard Arnault has been busy with his brands.
A week or so ago he was forced to fire Dior's enfant terrible, John Galliano
and this week he's buying, or rather stock swapping, LVMH for Bulgari in a 6 billion dollar deal.
Is Bulgari worth 6 billion?
Does it really sell that much swag?
With eye glasses, perfume and handbags in addition to their jewelry,
I guess that the revenue racks up.
But the WSJ questions the price
LVMH's High Priced Bulgari Jewel
LVMH Moët Hennessy Louis Vuitton offered €4.3 billion ($6.01 billion) for the Italian jeweler, including debt, on Monday, valuing it at an eye-watering 22 times forecast 2011 earnings before interest, taxes, depreciation and amortization, or Ebitda, well above LVMH's 10 times valuation. While Bulgari might prove a jewel in the strategic sense, the financial returns appear significantly less mesmerizing.

But the deal's financial merit is less convincing. True, LVMH's record in expanding brands should drive faster top-line growth at Bulgari. But luxury-goods-sector deals typically generate cost savings of up to 3% of sales, which, taxed and capitalized, would be valued at roughly €420 million in Bulgari's case, barely enough to cover one-fifth of the 60% premium to its predeal share price. Fortunately, this is a relatively small deal for LVMH, limiting its impact on earnings. But its initial return on investment could be an uninspiring 2.6%, estimates Evolution Securities.

Priced like a polished gem, delivering decent returns on Bulgari won't be easy.

Also, it appears that I jumped the shark on the whole celebrities getting paid to wear the goods at the Oscars.
According to National Jeweler, Anne Hathaway and Gwenneth Paltrow weren't paid by Tiffany and Louis Vuitton.
Representatives from Tiffany & Co., however, deny the claim.

“To reiterate what was shared with US Weekly, their sources are incorrect,” Carson Glover, director of worldwide media relations at Tiffany, said.
Reps for Hathaway, Paltrow, and Louis Vuitton have also told numerous publications the payment claims were incorrect, although it isn’t the first time Paltrow has been linked to lucrative endorsements.
OK, sorry Anne, sorry Gwen, my bad.

Finally, from IDEX online
Christies To Auction 10 ct Pink
New York—Another unusual fancy-color diamond is set to capture global attention with its color, size and price. Christie's will auction a 10.09-carat, cushion-cut, fancy vivid purplish-pink diamond at its April 12 Magnificent Jewels sale here. The auction house has estimated the diamond at $12-15 million.

Fancy-color and large diamonds have set a string of records prices recently. Four pink diamonds have fetched more than $1 million per carat at Christie's auctions, among them a vivid pink, 5-carat cushion-cut diamond that sold for more than $2.1 million per carat at Christie's Hong Kong in December 2009.

Doesn't it seem as though in every other auction, there's some big fancy colored diamond on the block?
Seriously, how many of them are out there?

...and how can I get my hands on one....
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Christina @ Fashion's Most Wanted said...

I can't believe LVMH is worth that much! Arnault will turn it round though. I wonder how Riccardo Tisci will fare at Dior? What a tough role to step into! xx

WendyB said...

I'd sell my company to LVMH for $6K and maybe they could throw in a nice dinner. Arnault, call me!

Belle de Ville said...

Christina, how does Tisci or any other designer replace Galliano. He was such a genius.
Wendy, the next time I speak to Bernard, I'l tell him to give you a call.

The Preppy Princess said...

Thank you for this, I was beginning to notice the "diamond of the week" proliferation as well! That whole Bernard/Bulgari thing seemed a bit off to me, but then, it seems he didn't solicit my input! (Heh,heh,heh.)

May you have a fab start to the week!

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