THE WALL STREET JOURNAL. Tuesday, November 26, 2019 |B5
BUSINESS NEWS
spect their operations.
“Each week I make notes,
whether it’s at Vuitton, Dior or
other brands,” Mr. Arnault said.
Tiffany’s boutiques are less
profitable than those of Cartier
and Bulgari, its major competi-
tors. To address that, LVMH
could tighten its retail network
in the U.S., where it has more
than 100 stores, says Erwan
Rambourg, an analyst at HSBC.
Those stores tend to sell the
brand’s less expensive jewelry.
Or it could boost efforts to
attract Chinese shoppers, who
tend to be more profitable cli-
entele than their Western
counterparts.
“Tiffany is under-indexed
with the Chinese,” Mr. Ram-
bourg said. “The Chinese con-
sumer really likes Tiffany but
obviously you need to invest
more to develop the aware-
ness.”
Despite the problems that
struck him in Seoul, Mr. Ar-
nault sees a huge advantage in
Tiffany’s retail network: The
brand sells almost exclusively
through its own stores, not de-
partment stores or other third
parties.
Mr. Arnault frowns on his
brands selling wholesale, al-
though some of the company’s
smaller ones do.
That relinquishes control
over pricing, allowing inde-
pendent retailers to sell at a
discount, and the look of
stores where the brands’
wares are displayed.
Mr. Arnault says that he ex-
pects Tiffany to boost LVMH’s
operating profit—€10 billion in
2018—by around €500 million
($550 million) in the first full
year the jeweler is included in
its results.emphasis is placed on the re-
sults of the quarter. It’s not at
all the same strategic focus.”
Mr. Arnault has also pio-
neered the use of distinctive
architecture in building bou-
tiques, making them destina-
tions for well-heeled tourists
around the world. Customers
routinely line up to get inside
Louis Vuitton shops, some of
which feature white-glove ser-
vice for top clientele.
Last month Mr. Arnault
made a visit to Seoul to inau-
gurate a Louis Vuitton bou-
tique designed by architect
Frank Gehry. Mr. Arnault qui-
etly took time to pop into a
Tiffany boutique nearby.
As Mr. Arnault browsed the
store, he noticed the glass on
a display case was dirty and
took a photo of it, telling his
team that it was an example of
management failure, a person
familiar with the visit said.
“There are things that are
terrific, and there are things
that must be improved,” Mr.
Arnault said in the interview,
when asked about the episode.
“I look at the details.”
Tiffany is set to receive
such scrutiny on a permanent
basis once the deal is com-
pleted. Mr. Arnault regularly
visits the boutiques of his big-
gest brands in the French cap-
ital and on trips abroad to in-
Continued from page B1
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