Sales at Bulgari stores in Russia have increased in recent days after the international community responded to Russia's military campaign in Ukraine, creating strict policies affecting cash flow.
"In the short term, it can boost business" - Jean-Christophe Babin, CEO of Italian jewelry company Bulgari shared. He also described the company's jewelry as a "safe investment".
But how long this push will last is difficult to say because when the measure of removing Russia from the SWIFT interbank payment system is fully implemented, it "could cause difficulties if not impossible to export to Russia," he said.
Several global consumer brands from Apple to Nike and energy giants BP, Shell and Exxon Mobil have announced withdrawals or freezes operations in Russia, while Europe's biggest luxury brands are still trying to continue operating in the country, Bloomberg reported on March 2.
Bulgari, owned by LVMH, is not alone. Richemont's Cartier still sells jewelry and watches. Swatch Group's Omega watches are still available, as are Rolex watches. All are continuing to sell and trying to maintain a non-political stance.
We are there for the Russian people, not for the political world. We operate in many different countries with uncertain and stressful periods," said Mr. Babin.
Just as gold can be a store of value and a hedge against inflation, luxury watches and jewelry can hold or even increase in the context of economic chaos caused by war and conflict. Famous watches can change owners in the secondary market at prices 3 or 4 times higher than retail prices.
According to this week's report by Edouard Aubin and his staff at Morgan Stanley, sales in Russia and to overseas Russia account for less than 2% of total revenue at LVMH and Swatch Group and less than 3% in Richemont. This is partly due to income differences between Russians. Moscow's average monthly salary was around 113,000 rubles ($1,350 in exchange rates before the outbreak of the Ukrainian war) and much lower in rural areas.
A spokesperson for Swatch Group said that the company is monitoring the situation in Russia and Ukraine very closely and declined to comment further. Spokesmen for Richemont, Rolex, Hermes, LVMH and Kering also declined to comment.
The pressure on big brands is also increasing. The commercial publication Business of Fashion, backed by LVMH, calls on retailers to close stores in Russia and not transport products online.
Bulgari, a jewelry brand founded by Sotirio Bulgari in 1884 and acquired by LVMH in 2011, could increase prices in Russia at some point, according to the CEO. If the ruble loses half its value, our cost is still the euro, we cannot lose money on what we sell, so we will have to adjust prices, he said.
Bloomberg pointed out that despite increased revenue, manufacturers of watches and high-end jewelry may soon have difficulty replenishing goods for stores. Russia has closed its airspace with member states of the European Union and Europe's largest logistics companies have suspended shipments to Russia.
Bulgari plans to continue opening stores in Russia. However, if the Russia-Ukraine conflict continues for many months, it will be difficult to get goods, Mr. Babin noted.
