That’s due, in part, to Russian income and wealth disparities, with a small number of billionaire oligarchs living way beyond the means of ordinary people. Sales in Russia and to Russians abroad account for less than 2% of overall revenue at LVMH and Swatch Group and less than 3% at Richemont, a “relatively immaterial” level, according to a report this week by Edouard Aubin and fellow analysts at Morgan Stanley. Rationally, this would be a cost to them, possibly outweighed by the positive communication image they get in other markets,” Bernstein analyst Luca Solca said by email.
“It is true that luxury brands could decide not to serve the Russian market. Yet the impact of the invasion on the value of luxury items is creating a potential public relations issue. Popular watches can change hands on the secondary market for three or four times their retail price. Much like gold, which can serve as a store of value and a hedge against inflation, luxury watches and jewellery can hold or even increase in price amid economic turmoil caused by war and conflict. “We operate in many different countries that have periods of uncertainty and tensions.” “We are there for the Russian people and not for the political world,” Babin said. All are continuing to make sales and trying to strike an apolitical stance. Richemont’s Cartier is still selling jewellery and watches, Swatch Group’s Omega timepieces are still available, as are Rolexes.
“How long it will last it is difficult to say, because indeed with the SWIFT measures, fully implemented, it might make it difficult if not impossible to export to Russia,” he said, referring to restrictions on Russian access to the SWIFT financial-messaging system.Įven as consumer brands from Apple to Nike and energy giants BP, Shell and Exxon Mobil pull out of Russia, Europe’s biggest luxury brands are, so far, trying to continue operating in the country.īulgari, owned by LVMH, is far from alone.