Swiss Richemont Richemont Group recently announced the purchase of another jewelry brand called Vhernier, headquartered in Milan, Italy. The most famous jewelry brands under this group are Cartier and Van Cleef&Arpels.
Li Feng Group stated in a media statement that it has resonated with the Traglio family members who hold the brand and will purchase 100% equity of the Vhernier brand.
The specific amount of this business operation has not been disclosed, and Lifeng Group stated that this business operation will not have a real financial impact on its decomposed net assets or operating results in the fiscal year ended March 31, 2023. The realization of the entire business operation still requires specific constraints and binding consent.
After this purchase is redeemed, Vhernier will be adjusted by Lifen Group to operate under its jewelry brand, which will belong to the same sector as Cartier, Van Cleef&Arpelt, and Buccellati.
Image source: Vhernier
It has been five years since Li Feng Group last purchased a jewelry brand.
In 2019, Richemont Group purchased the Italian luxury jewelry brand Buccellati for 230 million euros (approximately RMB 1.795 billion), with an annual expenditure of approximately 50 million euros (approximately RMB 390 million). Johann Rupert, President of the Richemont Group’s Board of Directors, stated at the time that the purchase of Buccellati “will assist Richemont Group in benefiting from the long-term momentum of the jewelry mall.”
This purchase of Vhernier highlights the group’s strategy of focusing on the jewelry business. The Li Feng Group, which is renowned for its hard and luxury goods, is actually more self-sufficient in the growth of its jewelry business in terms of scope.
In the fiscal year 2022/23 (ending March 31, 2023), 50% of the expenses of Lifeng Group came from the jewelry business and 35% came from the watch business. Among them, the jewelry business’s revenue during the complaint period increased by 21% year-on-year based on real exchange rates to 13.427 billion euros, which is the undisputed growth engine of the group. According to Vouge Business, Cartier has already achieved a spending range of 10 billion euros in that fiscal year.
Image source: Vhernier
At the third quarter of the 2023/24 fiscal year (fourth order of the 2023 calendar year) financial report gathering, Burkhart Grund, Chief Financial Officer of Richemont Group, expressed to the media that Cartier and Van Cleef&Arpels have further expanded their market share in global luxury jewelry. Moreover, these two brands have not only captured the market share of their competitors, but also captured the market share of non branded jewelry stores in their respective departments.
Amidst the decline in the high-end watchmaking industry, luxury goods industry investors remain optimistic about the prospect of expanding the jewelry segment. This can also be seen from the two leading companies, Lifeng Group and LVMH Group, which have continuously invested in building factories and expanding production capacity for their brands, and have made purchases and adjusted upstream suppliers to provide additional support for the brand.
Returning to purchasing Vhernier, Luca Solca, a Bernstein analyst at JiaGou Investment Bank, thought this was a “positive” signal. He stated in an interview with the Women’s Wear Daily that the Richemont Group is replicating the successful path they have cashed out after purchasing Van Cleef Yabao and Buccellati. “Li Feng Group is good at growing small brands into industry guide brands.”
The Richemont Group has not issued the current scope of Vhernier’s achievements. According to Luca Solca’s estimate, Vhernier’s revenue is approximately between 50 million and 100 million euros, which is similar to the range of Van Cleef Yabao and Buccellati that were purchased in 1999 and 2019.
The solid supply chain foundation and sufficient financial capital of the Lifeng Group in the jewelry industry undoubtedly contribute to the further growth of the Vhernier brand. At present, Vhernier’s main shopping malls are located in Europe and the United States, and its products are sold in brand direct stores and selected multi brand foot shops. What is not expected is that the Richemont Group, which has a strong wholesale market in Greater China, will definitely have a positive impact on its expansion into Asian shopping malls.
In fact, since 2018, the Traglio family has been interested in selling their Vhernier business. In August 2023, Italian media reported that Gucci’s parent company Kering Zheyun Group was interested in purchasing 49% of Vhernier’s shares, but this potential business ultimately came to an end. Compared to the Richemont Group, the Zheyun Group, which has always been lackluster in the jewelry industry, is indeed not a fantasy buyer.
It is worth noting that purchasing the Vhernier brand will also help Lifeng Group further enrich and diversify its ticket matrix in jewelry malls. Compared to several century old stores such as Cartier, Van Cleef&Arpelati, and Buccellati, Vhernier is actually much younger. This brand was founded in 1984 and has only 40 years of history to date.
Vhernier stopped creating jewelry mainly based on diamonds, gold, and precious gemstones, and his planning style was clearly influenced by modernism, which was different from the long-standing and conservative Cartier and Van Cleef Arpell. Johann Rupert mentioned in the purchase statement, “Vhernier’s unique style and aesthetic complement our existing jewelry collection perfectly.”