January 22, 2004
Fashion World Bullish on Jewelry
As the fashion world views couture collections in Paris this week, luxury labels are predicting a good 2004 and citing their jewelry collections among their most optimistic predictions for increased sales, says Women's Wear Daily on Jan. 20. Chanel, for example, is projecting a sales increase of 5-10% for its fragrance and beauty division, 15% for fashion and leather goods and 30% for fine jewelry.
Bernard Fornas, president of Cartier International, says the main challenge for the luxury industry this year is to return to double-digit growth after several troubling years marred by war, terror threats and global economic gyrations. These problems hit the jewelry and watch sectors particularly hard, although sales of those products boomed once again during the Christmas 2003 season.
"The industry's problem is that the world is now volatile: It's as if we are moving with a fog in front of us," says Fornas. "The brands that are clever enough to be flexible and reactive and to reduce the time to market will emerge strong. But we're in an environment of sudden change and you have to be able to shift."
Ralph Toledano, president of fashion label Chloé, told WWD the strong euro is putting pressure on margins, especially since marketing costs continue to climb. At Cartier, Fornas says the company raised prices in two waves last year for a total increase of about 10%. He says the amount of any price increases this year would depend on how much further the euro appreciates. "If it's about two to three percent we can absorb it, but if it's another fifteen percent we'll have to do something." He adds that pricing issues always remain sensitive and that "you have to be very careful" when it comes to raising prices.
Francesco Minoli, CEO of Italian jewelry firm Pomellato, told WWD he's particularly bullish about higher-end luxury instead of so-called "low-grade" luxury. "Those companies that stuck to [real] luxury and quality will be further rewarded in 2004 as long as they have a balanced quality/price ratio," he says, noting that Pomellato's 2003 sales were up 12% and that strong orders early in January bode well for the year.