PARIS: Global luxury brands might not be able to maintain their double-digit growth rates in the years ahead, the CEO of Cartier has suggested.
In an interview with the Wall Street Journal, Bernard Formas, who has headed the luxury group since 2002, suggested that the firm would maintain its focus on emerging markets to offset the potential effects of economic volatility elsewhere.
Cartier has already reacted to the 2008-09 global economic downturn by launching a lower-priced range of jewellery, reflecting customers' tighter budgets.
"We have always prepared the brand for the worst, even when things have been going well," Formas said. "I don't talk [growth] figures, because there are so many things that can happen... I don't know what level we will be at during 2012."
Bain & Company's latest Luxury Goods Global Market Study suggests that the sector grew by 10% in 2011, compounding 2010's double digit growth.
According to Q4 2011 results from Richemont, the owner of Cartier, the group's sales rose 24% year-on-year across the three-month period. This included a 36% rise in Asia-Pacific, which offset an increase of 15% for Europe. Japan, whose economy is still recovering from the effects of the tsunami and nuclear crisis of march 2011, was up by just 10%.
Formas suggested that China in particular would be an area of future focus for Cartier. Figures cited by the Wall Street Journal suggested that overall Swiss watch exports to the world's most populous nation were up 49% in 2011.
"The potential in China is so important," Fournas said. "China is our third- or fourth-biggest market, but the Chinese nationality is number one, because of the customers who buy products when they travel."
He added: "We have a fantastic geographical spread. We are like an aircraft with five engines … Europe, Middle East, the Americas, Japan and the rest of Asia."
Fournas suggested that fluctuations in commodity prices and currencies could impact on the business in 2012.
The poor performance of the euro – due mainly to the eurozone debt crisis of recent months – has already led to price increases. Cartier is particularly vulnerable to currency moves as it makes its watches in Switzerland, where the franc has been strong recently, and much of its jewellery in France.
"Overall, we have managed to bring in some price increases on the watches: we had increases of 10% last year in several markets," Fournas added. "It all depends on what the euro is doing."
Data sourced from Wall Street Journal/Richemont; additional content by Warc staff