Daily Management Review

Tiffany says goodbye to its CEO


Last night, Tiffany surprised many with an announcement on resignation of its general director Frederic Cumenal. This is the second resignation in the market of premium products over the past few days - in the middle of last week, Ralph Lauren’s CEO Stefan Larsson also said he’s leaving.

Tiffany told about its CEO’s resignation last night. Chairman of the Board of Directors Michael Kowalski, commented: "We would like to thank Frederic Cumenal for his contribution to development of the company". At the same time, Mr. Kowalski said that "Board of Directors is disappointed with latest financial results." Tiffany’s current head has worked in his office less than two years. The Board has not named his successor yet, saying only that the company starts looking for a new CEO. In mid-January, Tiffany announced a drop in its global sales by 2% in November and December, that is, in the midst of the Christmas sales. In the US, sales declined by 4%, and Europe showed 10% fall. Even 7% growth of sales in Asia has not contributed much in the overall result. 

Frederic Cumenal’s resignation is the second announcement among top managers of leading premium brands. February 2, Ralph Lauren said its CEO Stefan Larsson is leaving his post on 1 May. Founder of the company and its executive chairman Ralph Lauren commented: "Stefan and I are similar when it comes to affection and love for our brand. Nevertheless, it turned out that we have a different understanding of how to develop creative and consumer segments of our business". Resignation of Stefan Larsson was announced simultaneously with publication of the company’s quarterly reports. Revenues decreased by 12%, and profit - by 20%.  

Experts note that the premium companies have reconstruct their business on the background of the changing market conditions. In late January, Boston Consulting Group released a study stating that "luxury brands are in an urgent need to review effectiveness of their existing network of stores in the world of high performance of e-commerce". The authors note that growth of luxury goods market has slowed significantly in recent times. In 1996-2001, average annual growth was around 9%; it fell to 7% in 2002-2007, and to 5% - in 2008-2014. For 2015-2022, the growth is expected number just 2-4% per year. 

Saturation of markets in Asian luxury shops is one of the main trends. The researchers note that manufacturers will have to adapt to new conditions, including paying attention to US markets. Another finding is a need to activate Internet sales of luxury goods. BCG and Bernstein believe that "effectiveness of e-commerce motivates leading brands to implement multi-channel solutions as soon as possible, and identify which set of distribution channels is a best fit for a particular market." 

source: cnbc.com