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....

LVMH Lowering Prices To Make Money - What A Concept

From New York Magazine

LVMH Finds Ways to Make Money: Lower-Priced Givenchy Clothes!

LVMH isn't doing terribly in the downturn. Net profits for the first half of the year fell 23 percent, which sounds horrible, but competitor PPR just announced that its profits fell 76 percent, which is far more embarrassing (even if the decline was mostly owing to sales of YSL's Beauté division last year). But while LVMH's sales increased 0.2 percent, PPR's sales slipped 3.6 percent. Perhaps LVMH is winning because they're adapting better to These Times. They're slowly broadening their customer base for apparel, to include not only the very wealthy, but just the wealthy folks, too. And so Givenchy is launching a new capsule collection called Redux, designed by Riccardo Tisci. Already the marketing is genius: The name alone says, "Are you a middle-income consumer? You can probably afford me on sale!"

Prices start at around $340, which is still cheaper than Alexander Wang's biker shorts. The line is based on Givenchy classics like the white shirt and leather jacket. Tisci will show Redux twice a year alongside the pre-collection. The line will be available in October and will include shoes. So the downturn is paying off for the aspirational consumer. It's probably only a matter of time before more lines like this emerge. Funny how when the economy makes a luxury company its bitch, they find out who their real friends are: the poor.

(LMAO at this remark)

Except Louis Vuitton's customers. Those people are unstoppable.

Givenchy Fall 2009 RTW

Personally, I'm wondering if they are looking to cut costs by offering dresses with only one sleeve.

Luxe Biz - LVMH Stopping The Bleeding At ELuxury.com

OK....I'll admit that I'm last to the party on posting this news. Lauren Dimet Waters at Second City Style and Wendy B were all over this WWD article yesterday about LVMH closing their internet business, ELuxury.com.

I think that Wendy pretty much summed it up with this remark

The spokeswoman at LVMH, which owns eLuxury, apparently took a hit off her bong and, while exhaling, claimed that the closure is "not based on the site's financial performance, but rather because many of the brands it sells have developed their own online presences."

Not based on the site's financial performance???

Oh come on...that is some major spin from the LVMH people.

From WWD

Sucharita Mulpuru, an e-commerce analyst for the Cambridge, Mass.-based Forrester Research Inc., said she was shocked to hear of eLuxury’s decision to close its retail business. “I’m honestly really surprised,” she said. “It seemed to be doing so well.”

Mulpuru said that with the luxury market hurting overall and stores like Saks Fifth Avenue and Neiman Marcus suffering in this economy, she predicts there will be many more store closings, both online and offline. “Anyone who isn’t strong in this environment is especially vulnerable and will not survive,” she said. “But I really didn’t see this one coming.”

(Not that this is news but here we have another industry analyst who just didn't see it coming....remember that the next time you invest in a stock based on an opinion by an industry analyst!)

I always thought that the eLuxury mix looked like closeout inventory that they didn't have a prayer of selling through any other channels. But I did like the concept of one stop online shopping for top brands.

I'm sorry to see the business close and I wonder if this is a portent of the near future for online retailing.