More carats and sparkle: How LVMH plans to change Tiffany

Paris

FRENCH luxury goods group LVMH plans to overhaul Tiffany & Co's vast merchandise line-up to focus more on gold and precious gems while going more upmarket with its silver bangles after closing the US$15.8 billion takeover of the US jeweller this month.

Six sources including two people with inside knowledge of Tiffany's operations told Reuters the owner of Louis Vuitton would also likely revamp the appearance of the jeweller's stores and boost its presence in Europe and Asia.

More than a third of Tiffany's 320 shops are in the United States and two sources described some of them as out-of-date, shoddy and in need of refurbishing.

"LVMH can give Tiffany the kind of time and money needed to make some big investments in the product range and in stores worldwide, and wait for those to pay off in the medium term," one of the sources said.

The group is also considering building out Tiffany's line-up in watches, another source familiar with its thinking said. Tiffany's products range from US$150 silver pendants to diamond necklaces priced in the tens of millions. Silver jewellery has gross margins of around 90 per cent and offers a perfect entry point for younger, less wealthy shoppers, but top industry names also need the medium- to high range - with a price tag above US$100,000 - to create an aura of exclusivity, experts say.

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In a video message to employees during a recent town hall, LVMH boss Bernard Arnault, who is also France's richest man, said he wanted to elevate Tiffany's standing, even if that took time.

A senior store employee in Europe said the jeweller would benefit as a more sophisticated, exclusive brand under LVMH, but also worried about the group's reputation as a demanding owner. "If a store doesn't quite work, they just shut it down," this person said, speaking on condition of anonymity.

LVMH will scrutinise store performance and locations, and could use its clout to get better leases or find better showcases freed up by other brands within the group.New York-based Tiffany, founded in 1837, achieved world fame with the 1961 movie "Breakfast at Tiffany's" starring Audrey Hepburn, but a fresh marketing push could help the brand.

Alexandre Arnault - one of four Arnault children with roles at LVMH and now Tiffany's executive vice-president in charge of product and communication - told the town hall he would focus on advertising campaigns and luring young customers. REUTERS