Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Rich Russians turn to luxury jewellery, watches to shield savings

Rich Russians turn to luxury jewellery, watches to shield savings

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.

With sanctions on Russia sending the ruble plunging and keeping stock markets shuttered, the country’s wealthy are turning to luxury jewelry and watches in a bid to preserve the value of their savings.

Sales in Bulgari SpA’s Russian stores have risen in the last few days, the Italian jeweler’s chief executive officer said, after the international response to the nation’s invasion of Ukraine severely restricted the movement of cash.

“In the short term it has probably boosted the business,” Jean-Christophe Babin said in an interview with Bloomberg, describing Bulgari’s jewelry as a “safe investment.”

“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.

Even as consumer brands from Apple Inc. to Nike Inc. and energy giants BP Plc, Shell Plc and Exxon Mobil Corp. pull out of Russia, Europe’s biggest luxury brands are, so far, trying to continue operating in the country.

Bulgari, owned by LVMH SE, is far from alone. Richemont’s Cartier is still selling jewelry and watches, and Swatch Group’s Omega timepieces are still available, as are Rolexes.

“We are there for the Russian people and not for the political world,” Babin said. “We operate in many different countries that have periods of uncertainty and tensions.”

Jean-Christophe Babin at his office in Rome, on March 1


Much like gold, which can serve as a store of value and a hedge against inflation, luxury watches and jewelry can hold or even increase in price amid economic turmoil caused by war and conflict.

Popular watches can change hands on the secondary market for three or four times their retail price. Yet the impact of the invasion on the value of luxury items is creating a potential public relations issue.

“It is true that luxury brands could decide not to serve the Russian market. 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.

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.

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. The average monthly wage in Moscow is about 113,000 rubles ($1,350 at pre-invasion exchange rates), and much lower in rural regions.

A spokesperson for Swatch Group said the company was monitoring the situation in Russia and Ukraine very closely and declined to comment further. Spokespeople for Richemont, Rolex, Hermes, LVMH and Kering SA declined to comment on their operations in Russia.

Pressure on the major brands is growing. Trade publication Business of Fashion, backed by LVMH, urged retailers to shut down Russian stores and not to ship products online. In a widely shared editorial, Editor-in-chief Imran Amed said the move would be “largely symbolic” but that it would show “commitment to a strong moral position.”

Reaction has been muted, so far. Balenciaga, whose creative director Demna Gvasalia is Georgian, scrapped all fashion content from its Instagram page days before its autumn/winter show in Paris. In its place is the Ukrainian flag and a call to donate to the World Food Program. LVMH said it’s donating 5 million euros ($5.6 million) to the International Committee of the Red Cross to aid victims of the war. LVMH is also providing financial and operational assistance to its 150 employees in Ukraine, it added.

Bulgari, established in 1884 by Sotirio Bulgari and bought in 2011 by LVMH, is likely to raise prices in Russia at some point, according to the CEO.

“If the ruble loses half of its value, our costs remain euro costs, we cannot lose money on what we sell, so will have to adapt the prices,” he said.


Whatever sales bump they experience, luxury watch and jewelry-makers may soon have difficulty restocking stores. Moscow closed its airspace to European Union countries, and the continent’s biggest logistics firms have halted shipments to Russia. Burberry Group Plc said it has halted all shipments to Russia until further notice amid operational challenges.

Bulgari plans to keep its stores open and forge ahead with the development of a new hotel in Moscow despite the war. Nevertheless, if the crisis lasts for months “it would be difficult to supply the country,” Babin said.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×