FT SPECIAL REPORT Watches & Jewellery Friday June 5 2015 www.ft.com/reports | @ftreports Watchmakers face a Seeing red Record price for Sunrise Ruby Inside The terminator timepiece Arnold Schwarzenegger bumpy ride after boom unveils his watches with muscle Luxury leaders remain in the wake of the Syrian and Islamic While the political protests in Hong State of Iraq and the Levant (Isis) con- Kong and the residual effects of the gov- Page 4 bullish in the face of flicts,whichhadbeenexpectedtoweigh ernment crackdown on gift giving have on sales, Middle East operations saw a played some part in the region’s sub- currency fluctuations 13 per cent boost to €841m. But in Asia dued performance, the crucial factor A winning formula? and a slowdown in Pacific, the company’s biggest market, has been the decision by many watch- Shelby Cobra Asian markets, salesweredown6percentto€4.1bn. makers, including Patek Philippe, Her- and Baume & The group’s main worries continue to mès and Chanel, to raise their prices in Mercier join writes Elizabeth Paton be centred around Hong Kong and some parts of the world and lower them Macau, two of the most important mar- inothers. forces ketsforluxurygoods,which,combined, Jon Cox, an analyst at Kepler Cheuv- Page 4 n the past six months, a cocktail of account for a fifth of global annual reux, says the move “has led to a great wavering Asian consumer enthusi- watch sales. This in turn has fuelled dealofunpredictabilityintermsoftrad- asm, currency headwinds and geo- fears of a build-up of unsold watches in ing, both wholesale and retail, as many political instability has triggered a Hong Kong that have been deterring big players continually adjust prices, I sales slowdown that is taking a toll retailersfrombuyingfreshstock. particularly in Greater China and the onsomeofthebiggestnamesinthehard “Who knows how long this region is US, and suppliers delay purchases Bite of the Apple luxurysector. going to have less robust demand,”says ahead of price cuts in markets linked to Luxury brands get smart InApril,Richemont,ownerofsomeof chairman Johann Rupert. “We are not the US dollar.” He says the fluctuations as they prepare to take theindustry’sleadingmaisons—includ- saying no demand, but less boom time have led to a migration of spending by on the Apple Watch ing Cartier, Piaget, Vacheron Constan- demandforsure.” wealthy Chinese to other parts of Asia, Page 6 tin, Officine Panerai, Baume & Mercier Latest data released last week show notablySouthKoreaandSingapore. and Van Cleef & Arpels — issued a stark thatSwisswatchexportsareupbyjust2 In response to the weakness of the profit warning, predicting that earnings per cent this year to date. This is a con- euro and the strength of the US dollar, A guaranteed diamond would drop by more than a third this tinuation of the subdued trend of 2014 Richemont raised prices in the euro- is forever year as the stronger Swiss franc of all leading watch players, analysts zone and cut them in the US, Middle De Beers has invested increased production costs for time- say,and a reflection of the sector’sover- East and Greater China, but said that no $10m in a grading pieces. exposure to Greater China, where furtherchangeswereplannedfornow. Sure enough, the world’s second- exports have fallen by 9 per cent since “We are now where we want to be,” facility in Surat, India largest maker of luxury goods, after thestartof2015. saysMrRupert. Page 10 LVMH,reportedinMaythatnetincome Thegapbetweenthepricesforluxury fortheyeartoMarch31wasdown35per watches and jewellery in Europe and in A passion for jet cent to €1.33bn, and announced a fur- A Chinese consumer would China is the biggest it has been for three ther unexpected 8 per cent decline in years, according to analysts at Bern- A rare Burmese ruby, with a “pigeon’s private collection of Cartier pieces, and Elizabeth Taylor Aprilsales. save 39 per cent on luxury stein. Currency swings mean that, blood hue” and weighing 25.59 carats, was part of the auction house’s Fashion designer Thegroup’scoremarkets,Europeand goods by flying to Paris despite the price rises in Europe, a Chi- was sold for a world auction record of Magnificent Jewels & Noble Jewels Anna Sui on her love of NorthAmerica,wereup7percentand8 nese consumer would save 39 per cent $30m at Sotheby’s in Geneva last sale. The auction achieved $170m. vintage jewellery per cent respectively to €3bn and instead of buying at home ontheaveragepurchaseofluxurygoods month. The Sunrise Ruby, from a An auction is like theatre — Page 12 €1.4bn. And despite regional volatility Continuedonpage3 Page 11 2 ★ FINANCIALTIMES Friday 5 June 2015 Watches & Jewellery News Diamond heist leads to a spike in sales of insurance Security Companies are having to demonstrate they have well-managed risks, writes Gill Plimmer ust days before the Cannes Last month, eight men were charged Film Festival in France last with conspiracy to burgle following the month, masked thieves Hatton Garden raid. They are aged entered a Cartier store on the between 48 and 76 and include three J city’s main seafront road — the pensioners. Promenade de la Croisette — pointed a The challenge the thieves faced in gun at customers and staff and escaped breaking into the vault no doubt with€17.5mofwatchesandjewellery. explains why so many of the Hatton Thieves drilled incident—albeitaseriousone—isprob- In turn, she adds, companies need to receiving compensation for uninsured The timing was significant. Ahead of Garden jewellers using it were unin- through a thick ably not enough to make a big differ- ensure that the insurance they buy is itemsare“verylimited”. the film festival, leading jewellers ship sured. concrete wall to ence,”hesays. aligned with their risk exposure and However, even if jewellers and their in their most expensive gems for celeb- Assetsure, the specialist insurance access a vault in Asaruleofthumb,itcostsabout1.5to “willrespondwheretheriskshappen”. customers do adopt stringent precau- ritiestowearontheredcarpet. provider, says it has seen a doubling in Hatton Garden, 2 per cent of the value of the stock for “This includes understanding the tions, Simon Aitchison, head of jewel- The Cannes robbery came soon after the number of customers seeking insur- London jewellers to insure their goods. Over the values at risk at each stage of the manu- lery at Beazley, an insurer, points out the Hatton Garden heist in London, ance for items stored in safety deposit Getty past few years, the commercial jewel- facture, supply and retail chain, and that jewellery and watch thefts remain when a gang of thieves ransacked 72 boxesinthewakeoftheincident. leryandartsinsurancemarkethasbeen making sure the agreed levels of indem- common. safetydepositboxesusedbylocaljewel- Bob Andrews, marketing manager at relativelystable. nityarecorrect.” “If you are a Rolex dealer, you will lerystoresovertheEasterweekend. Assetsure, says: “A number of people Tracy Murrell, global client advocate Ms Murrell says that companies also have been targeted,” he says. “People Although both incidents were rela- who stored their jewellery and valua- atWillisFineArtJewellery,believesthat need to understand the extent to which haven’tstoppedstealing.” tively high-profile and received consid- bles in banks or secure facilities didn’t theseincidentsmakeinsurers,aswellas they can expect to be indemnified by erable media coverage, Charles Reese, a think it was possible for them to be sto- customers,morecautious. theirstorageandtransitproviders. broking director for Towergate Insur- len.Thathasallchanged.” “Generally, the inventory market is “You can buy off-the-shelf coverage, ance,whichspecialisesinjewellery,says He adds: “Not all such facilities very competitive, but as losses occur but the last thing you want is to buy suchheistsare“notinfrequent”. insure the goods they store — as in the andunderwritersarepayingoutonsize- insurance without stress-testing that Thefts from safe deposits vaults are case of the Hatton Garden Safe Deposit able claims, they are going to be more cover against likely claims scenarios,” More on FT.com much less common than hold-ups, in raid. This has highlighted the fact that selective about what they underwrite addsMsMurrell. part because they are more complex no security precaution is ever water- andwhattheycharge,”shesays. Following the Hatton Garden theft Art deco revival Contemporary crimesthatrequireextensiveplanning. tight and that, unless your items are “The onus is on insured parties and some of the stolen goods were subse- designs are drawing on the bold, To gain access to the Hatton Garden fully insured, their value is not pro- their brokers to demonstrate that a quently recovered. Forensic tests are geometric styles of the 1920s Safe Deposit building near Holborn, tected.” company has well-managed risks. The currently being run and the police hope central London, the thieves needed to Even though London is the world’s costisinfluencedbytheindividualcom- to return the items to their owners as Buccellati on show The Italian disable the lift, abseil down its shaft, biggest insurance market with cover for pany’s claim history and whether it is ‘No security soonaspossible. jeweller’s collection is on display in prise open some shutter doors and drill jewellers worldwide largely underwrit- perceivedbyaninsurerasagoodriskor It is not known if all the missing Milan alargeholethroughthevault’swalls. tenthere,MrReesesaysthattheHatton not.” precaution objects have been found and Harry So difficult was the task that, after en- Garden