Let's first look at Cartier's profitability. In its parent Richemont Richemont Group, Cartier, Van Cleef & Arpels and Baudinaud belong to the jewelry business segment. The annual turnover and operating profit of this department are as follows. The operating profit rate calculated by dividing 1682 by 5729 is 29. 1%.
At the same time, Tiffany's operating profit is 20.9%, which is far lower than Cartier's profit level.
In LVMH Group, which mainly focuses on fashion categories, the operating profit margin is 17.98%.
In the luxury goods industry, the manufacturing cost can basically be controlled within 35%. Why did the final operating profit drop from 65% of gross profit to less than 30%? Where did the 35% go?
This is the most expensive link in the luxury goods industry: advertising marketing and channel fees. Luxury stores cost money, advertising costs money, and every detail is kept at a high level, all of which are smashed with money.
If you want to sell your products to sky-high prices, consumers are willing to pay this high price, which is the result of the successful construction of luxury brands. This long construction road needs a lot of money. It is impossible to build a brand dream by the product itself.
Tiffany paid a huge creative fee to the advertising creative company, then spent a lot of money to shoot and produce advertisements, and finally spent money to promote them. This happens not only a few times a year, but almost every week. Brands rack their brains to think about the presentation of products, just to let consumers be effectively touched and influenced, and then consume.
Do you know what is the biggest secret of luxury goods industry? That's perfume. A bottle of perfume is more expensive than perfume. But neither is as expensive as advertising. Did you buy perfume or perfume bottle? Did you buy jewelry or jewelry advertisements?
Cartier and Tiffany are both internationally renowned jewelry brands, and Cartier is superior to Tiffany in both brand level and direct product price.
As far as business competition is concerned, these two brands are inseparable. Basically, if they all appear in the same shopping mall at the same time, just like there must be KFC near McDonald's and Adidas near Nike.
When it comes to profit margin, the profit of the brand is really not low, because the cost of the product itself is not high. If the brand factor is not considered, the raw material price of the same ring is basically 10% of the listing price, and may be lower than 10%.
However, the reason why these brand-name goods can be sold so expensive is because of the brand added value of famous brands. These international brands have basically become well-known brands after years of precipitation, rather than being born this way. In other words, these brands spend a lot of time and cost on brand operation and promotion. When they succeed, selling them at a higher price can be regarded as recovering the money they spent before.
When the economy is relatively good, the Asia-Pacific market of internationally renowned brands, especially the China market, has made great contributions to the performance. But in recent years, these famous brands have had a hard time in China, and the number of stores of many brands is decreasing. In addition to some consumers buying in overseas stores, the decline in purchasing power is also one of the influencing factors.
Cartier, Tiffany, these are international first-class jewelry brands. Why are luxury brands called "luxury goods"? Because they are expensive and very luxurious, they are not affordable for ordinary consumers, and the sales price is not determined solely by jewelry materials.
You're right. Tiffany has a sterling silver necklace. It can be sold for 1000 yuan. How much can you earn? Let's not talk about the publicity expenses and jewelry research and development expenses invested by this brand. Let's calculate it by cost alone. A pure silver necklace is about 5~ 10g, and the raw material price of one gram of silver 999 is about 5 yuan, which means that the material cost of a necklace is only 25~50 yuan, and it can be sold to 1000 yuan. Do you know why? The main price is the brand value of luxury brands, above the word "Tiffany".
International first-line luxury jewelry brands, such as Cartier, Tiffany, Bulgari, Van Cleef & Arpels, etc., cannot simply calculate the cost by their materials. Its selling price is equal to its cost price+processing fee+publicity fee+brand value, and the brand value will account for more than half, so you will feel that it is particularly expensive to sell.
The profits of these brands are particularly high, but they spend most of these profits on brand maintenance and promotion, jewelry design and research and development every year. The expenses paid in these aspects will also be passed on to consumers, and the wool will be on the sheep. But when your class level reaches, you will not care about this expense. On the contrary, you will enjoy the confidence brought by luxury brands. This is why there are many big-name jewels on the market, all of which are one-to-one drawings, the same gold material and the same natural diamonds, but the price is only one tenth of that of big-name jewels, because everyone likes the pride brought by brand recognition. Do you agree with me?
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Take Tiffany as an example. Friends around us often joke that its products are "the price of silver selling platinum, and the price of gold selling diamonds", then we will take it for granted that the profit margin of this luxury product must be amazing, and the cost may be only a few tens of pieces of silver can be sold to thousands of pieces, which is how many times it has earned.
But in fact, the real situation is not so simple, because the profit rate should be divided into two indicators, one is the net profit rate and the other is the gross profit rate.
Gross profit refers to the money earned in the process of commodity sales. Gross profit = selling price-cost. From this point of view, luxury goods do have the characteristics of high gross profit, because the price of luxury goods is expensive, far higher than the material cost and manufacturing cost.
But the net profit rate of luxury goods is not necessarily high. Net profit is the money earned during the whole operation of the company, and net profit = total income-total expenditure.
In addition to advertising and channels, most luxury goods are opened in the most prosperous commercial street in the city center. This cost, as well as the money for training and hiring shopping guides, is the cost of the company and should be deducted from the gross profit.
In addition, luxury goods will certainly adhere to the principle of "rare things are precious", and it is impossible to replicate production in large quantities like traditional retail industry, and even there will be many limited editions, which means that luxury goods will control production, it is difficult to exert scale effect, and it is impossible to save costs.
Of course, both the cost of the product itself and the cost of later operation are passed on to our consumers to bear. Buying luxury goods is not about cost performance, but about the image and premium value of the brand.
So just think about this. Consumers who want to pursue cost performance should try not to consider luxury goods, while those who have the strength to buy luxury goods are just the sense of identity brought by consumer brands. Everyone can buy consumer goods that suit them according to their own needs.
Cartier's ordinary diamond bracelet can be sold for more than 80 thousand yuan, while the equivalent super A bracelet only needs less than 1 10 thousand yuan. Some even have jewelry produced in the same factory as Cartier, but the price is much lower than Cartier's, so the brand is the most important thing to determine the price of a piece of jewelry, and we consumers pay for the brand.
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Cartier's profitability. In its parent Richemont Richemont Group, Cartier, Van Cleef & Arpels and Baudinaud belong to the jewelry business sector, and the annual turnover and operating profit margin of this sector are 29. 1%= 1682/5729.
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At the same time, Tiffany's operating profit is 20.9%, which is far lower than Cartier's profit level. It can be seen that the profitability of these two brands is much lower than we thought.
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It is not difficult to explain that the most expensive links in the jewelry industry are: advertising marketing and channel fees; Luxury goods cost money to open a shop, and advertising costs money. Many stars will endorse these internationally renowned brands, and the annual endorsement fee is also a big expense, as well as brand maintenance fees. Every detail must maintain a high standard to represent its brand image, which can be said to have cost money.
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These high-end jewelry brands need to shoot advertising films every year, and they are all top-level ones that need the best advertising companies to complete, and then they need to shoot large films and do publicity every quarter. In fact, the process of brand building costs money. Because it is an international brand, everything needs the best, and the price is naturally the highest.
So these big-name jewels look very profitable. In fact, they all invest money in advertising to maintain their brand image, so as to ensure their brand value continues to increase. Therefore, 600 yuan paid the advertising company for Tiffany's silver ornaments above 1000 yuan.
Cartier and Tiffany are expensive to sell, and the profits are naturally high. The average gross profit margin is also 60+%, and the net profit is 65,438+00%, which belongs to high gross profit and high profit. In addition, it is more obvious to compare the profit level of a company and its peers.
Let's take Tiffany's annual reports in recent years and the latest four quarterly reports to see Tiffany's actual profits. In the fourth quarter, the revenue was $65,438+00120,000, the gross profit was 629 million, the gross profit was 62%, the net profit was 9.37%, and the standard high gross profit was low. We know that Tiffany specializes in silver ornaments, lottery gold and diamonds, and the prices are much higher than those of domestic jewelry brands, so the profits are high. For example, the price of Tiffany double T rings is 14600, 9.37% of the net profit from sales is 1368, and 62% of the gross profit is 56 12. Gross profit minus net profit is Tiffany's various operating and publicity expenses.
Comparing the gross profit and net profit of domestic jewelry brand Zhou Dasheng, we can find that the gross profit of domestic jewelry brand is only 32%, which is much lower than that of international luxury brands, but the net profit of sales is 15%, which is much higher than that of internationally renowned luxury jewelry brands.
The gross profit margin of international luxury brands is very high, which can also be clearly seen from the sales price. However, their investment in brand promotion and maintenance, design and research and development is indeed much higher than that of domestic jewelry, so their net profit is not as high as expected.
Tiffany's gross profit margin is currently 63%, which is relatively high. But there is no need to say that they are profiteering.
On Wednesday, after a period of turmoil, Tiffany released its gratifying first-quarter results, and the prospects for this year are bright.
Tiffany's share price reached its highest level since 200 1. So far this year, Tiffany's share price has risen by 6.3%.
It is recognized in the industry that Tiffany's transformation plan has begun to bear fruit. This plan is mainly aimed at young people who are price-sensitive, and Americans are used to calling them "millennials".
Tiffany tried many ways to attract them to stores, Pandora and online jewelry seller Blue.
Nile robbed the business.
This year, Tiffany not only began to sell many cheaper jewels to young people, but also produced many "daily necessities", such as paper clips, wool balls and bottle openers.
However, the prices of these paper clips are astonishingly high, which has attracted wide attention. In China, young people exclaimed that "poverty has limited my imagination".
Tiffany is still trying to create a sensational new topic this year. For example, we are preparing a series of "paper flowers" made of platinum and diamonds.
In the latest quarter ending April 30, Tiffany's sales in the United States, its largest market, increased by 9%, while in the Asia-Pacific region it increased by 28%.
At a fixed exchange rate, same-store sales increased by 7%. Tiffany even significantly increased its gross profit margin by 63%. A year ago, it was 62. 1%.
Tiffany's expectations for fiscal year 20 19 have all been raised. American analysts believe that global economic growth remains stable and will continue to benefit Tiffany's high-end products.
Net sales in this quarter increased by 14.8%, reaching 103 billion USD. Tiffany also announced the repurchase of shares worth $654.38 billion.
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The profit of luxury goods is very high, because we often find that products like these luxury goods don't look very beautiful or easy to use. Why can you sell it so expensive? There is a term here called "brand premium".
Brand premium generally refers to the value beyond the cost of the product itself, and here we can also equate it with profit. Of course, specific problems still need to be analyzed in detail. Why can luxury goods be sold so expensive? Because people buy not only this product, a bag or a watch, but his brand and the added value brought by this brand.
For example, we used to like things with big logos. Products such as lv and channel have printed their own famous logos on their own products. This is because they found that consumers can gain a sense of identity and identity by buying such products. Although it is sometimes considered a bit melodramatic, it is true. These products must let people see what brand they are and let the holders see the strength behind them through a bag or a watch.
For another example, in recent years, things with big logo have become less and less popular, and people have begun to sneer at them, feeling that they are too exposed to show off, but are luxury brands no longer exporting this sense of identity? No, for example, burberry's classic plaid actually represents its brand. It doesn't need to print its own logo at all, but represents its own brand. So people can still find the sense of identity brought by the brand from this element.
This is just a brand premium owned by luxury goods, but it is enough to explain the problem. That is to say, why can luxury goods sell so high? Not because of how good their things are, but because a bracelet is made of good materials, it is impossible to make tens of thousands of pieces. In fact, the materials are not that good. The profit here often refers to the premium of the brand, the value brought by the brand itself, after-sales service and so on.
Profit rate should be divided into two indicators, one is net profit rate and the other is gross profit rate.
Generally speaking, the luxury goods industry has the characteristics of high gross profit.
But the net profit rate is not necessarily high.
Gross profit refers to the money earned in the process of commodity sales.
Gross sales margin = gross sales margin/sales revenue × 100%=/ sales revenue × 100%.
Net profit is the money earned in the whole process of company operation.
Net profit rate = [[net profit]] [[main business income ]]× 100%
Luxury goods are generally more expensive, and the price is much higher than its material cost and manufacturing cost.
According to the financial briefing issued by LVMH, Richemont and Kaiyun in March 20 17. The domestic media compiled a chart of gross profit margin.
According to the chart, the gross profit rate of kering with the lowest gross profit rate is over 60%. The other two are around 65%.
35 yuan's products are about 100 yuan, which is probably the concept.
Continue to quote the chart.
Kering performed the worst, with a net profit margin as low as 10%. Although its performance is not bad, it is definitely not a very outstanding expressive force.
Give you a comparison, it will be easier to understand. According to Alibaba's latest quarterly financial report.
Alibaba's profit margin has declined, with a profit margin of 28% in the latest quarter.
The luxury goods group with high profits in everyone's mind barely reached 20% at its best. Generally lower than 15%. So the net profit margin is not particularly high.
Why is the gross profit margin of luxury goods so high, but the net profit margin is not so high?
Because luxury goods will invest a lot of money in order to establish a brand image, which is not included in the cost of goods. But it must be incorporated into the company's operations. In addition, maintaining a large number of image stores, training and hiring a considerable number of shopping guides, the company's own operating costs and so on. All this money will be recovered from the gross profit of the product.
In addition, luxury goods often control output, and the scale effect is very tender.
Therefore, although every single product is sold, luxury companies can make a lot of money. However, every time a product is sold, luxury enterprises need to do a lot of work outside the product.
Therefore, even if the gross profit is so high, it is not impossible for luxury enterprises to lose money if they do not operate well!
Cartier and Tiffany never sell jewelry at the market price of gold, but at a fixed price far higher than the price of gold. It is reasonable to say that the profit rate should be high, but this is not the case at all.
Let's first look at Cartier's profitability. In its parent Richemont Richemont Group, Cartier, Van Cleef & Arpels and Baudinaud belong to the jewelry business segment. The annual turnover and operating profit of this department are as follows. The operating profit rate calculated by dividing 1682 by 5729 is 29. 1%.