Sanctions against Russia weigh on those close to Putin. Many oligarchs have funneled some of their assets into luxury jewelry and watches in an effort to preserve the assets they hold in the face of sanctions and an increasingly weakened rouble.
Bulgari is one of the luxury companies that in recent days have seen their sales soar because it is “a safe investment”. The words are from Jean-Christophe Babin, CEO of the Italian brand, in statements to Bloomberg.
The brand, which is owned by the LVMH group, had originally planned to keep stores open in Russia and change prices to offset losses from the falling rouble. The parent company’s decision ended up changing Bulgari’s plans, since the group’s 124 stores have been closed since Sunday March 6.
Besides jewelry, luxury watches have also been a bet to escape the devaluation of the ruble and the sanctions against Russia. Omega (from the Swatch group) and Rolex will be the stores to which the Russian oligarchs will turn. Cartier was another of the brands, but the company has since suspended operations in that country, citing operational difficulties and worker safety risks.
Data from Morgan Stanley, cited by El Economista, shows that the Russian market is not particularly relevant for luxury brands. This country represents, for example, 2% of the total turnover of the LVMH and Swatch groups, ie less than 3% of Richmont.
Luxury brands position themselves
Despite the high demand for jewelry and watches by Russian oligarchs, the truth is that most luxury brands have chosen to distance themselves from the Russian regime.
The French company Hermès was the first to take a stand and announce the temporary closure of the three stores it has in Russia. It employs around sixty people.
Balenciaga, of the Kering group, deleted all messages from its Instagram account to replace them with the Ukrainian flag, and also appealed for donations to the World Food Programme.
The owner of Louis Vuitton, in addition to closing the group’s stores, donated 5 million euros to the International Red Cross and announced financial support for its approximately 150 workers in Ukraine.
Burberry, which has two stores in Russia, has suspended all shipments to the country in the face of “operational challenges” that currently exist.