Specialist
Former divisional leader at Chanel Inc
Agenda
- Tiffany’s sales growth outlook and drivers in North America since January 2021 acquisition by LVMH (PAR: MC), highlighting customer acquisition, product competitiveness and pricing power
- Distribution analysis – DOS (directly operated store) positioning and expansion opportunities, plus online penetration outlook
- Gross and operating margin dynamics, including marketing requirements to sustain turnaround progress
Questions
1.
What has changed at Tiffany since LVMH acquired it in January 2021? There seems to be a good turnaround.
2.
How has the new leadership impacted Tiffany’s commercials or strategy?
3.
We’re hearing about strong demand for Tiffany in North America. What is driving the turnaround success to date?
4.
Why do you think the jewellery market is booming in North America and how sustainable is that?
5.
To what extent is the success of new launches or product shifts driving the Tiffany brand’s growth and turnaround in North America?
6.
You mentioned how the strategy of Tiffany’s previous management is now being rewarded. To what extent is the turnaround success due to new management vs previous management strategies coming to fruition?
7.
You said LVMH’s acquisition of Tiffany could lead to some potential internal issues, particularly around departures. What sort of culture clash could we expect? How disruptive could a large French group acquiring an American brand such as Tiffany be?
8.
Do you anticipate LVMH will manage the process or integration relatively smoothly? It has a history of acquiring companies.
9.
What is your 2021-23 organic growth outlook for Tiffany in North America?
10.
How might the entry price points in high-end jewellery be adjusted?
11.
You mentioned increased penetration in gold and high-end jewellery, but how do you expect the mix to shift if we consider this as a proportion of total sales? How should we assess the magnitude of this price penetration shift?
12.
What do you think would be the optimal price mix?
13.
How is the average unit retail price likely to change given the shift towards slightly higher-price categories?
14.
What is Tiffany’s average unit retail price today, considering you said an average price point of USD 4,500- 5,000 would be a good shift?
15.
We’re hearing about opportunities for Tiffany to expand into non-jewellery. What are the growth opportunities there?
16.
How is Tiffany’s customer profile changing under new ownership? What is the evolution of the target demographic?
17.
Does Tiffany’s product need to change to suit the new younger demographic it’s targeting?
18.
Tiffany had around 124 stores at the time of the sale, but you mentioned potential store closures. What is an optimal store count for the brand in North America?
19.
You said 100 stores in North America will be better for Tiffany. Is that your take on what an optimal number of stores would be?
20.
What percentage of the Tiffany estate needs refurbishing?
21.
You mentioned hypothetically doubling the sales per store from USD 10m to USD 20m. Is anything else critical to improving retail productivity?
22.
In the most recent results before Tiffany was integrated into LVMH Group, online sales reached 12%, almost doubling during the pandemic. How might this figure grow over the next 3-5 years?
23.
Is the increase in online penetration at odds with the strategy towards higher prices? Are customers less willing to buy higher-price goods online vs offline?
24.
Would 15% online sales be saturation point or could Tiffany go higher than that in the medium-to-long term?
25.
In 2020, before its integration, Tiffany reached gross margin levels in the mid-60s percentage-point range. How could an increase in the price mix improve the gross margin profile?
26.
Is that through pricing or is that also through better purchasing power through the LVMH Group?
27.
What do you think is the timeline to reaching mid-70s gross margins?
28.
You spoke about a potential change in inventory levels. Could you expand on how inventory requirements could change?
29.
Marketing comes at a high cost, so what relative marketing expense is required to support the growth, in relation to total sales?
30.
With the increased focus on marketing investment, there’s less investment allocated towards product development or people. Would you agree? What’s the risk there?
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