Dior chief upbeat on Europe prospects
European economy set to do better in coming years with Macron reforms
SHANGHAI: Christian Dior SE chief executive officer Sidney Toledano is optimistic the European economy will do better in the coming years, especially with recently elected French President Emmanuel Macron’s promises to reform labour market regulations.
“We have a new president – I think this will be very positive for the economy,” said Toledano in an interview with Bloomberg TV in Shanghai.
“I am optimistic about the economy and that the coming years will be better. And our middle class will become upper class as we see happen in China, and this is good for luxury.”
Driven by a recovery in Chinese demand after President Xi Jinping’s anti-corruption campaign in late 2012 hurt the sector, luxury companies including Hermes International SCA and Gucci parent Kering SA have reported improved sales forecasts.
On the back of a new artistic director, continued revenue growth and a 6.5 billion-euro (US$7.3bil) takeover by LVMH Moet Hennessy Louis Vuitton SE, Dior shares have gained almost 80% in the past 12 months. They added as much as 0.3% in early Paris trading on Tuesday.
In France, Macron wants to make hiring and firing easier and to move the country’s collective bargaining on wages and working time from the industry to the company level, as well as placing a cap on severance packages awarded by industrial tribunals.
Toledano said that China is growing in priority for the Paris-based company, which has gained market share in the Asian country. Unlike some other luxury brands, Dior did not see demand fall during the anti-graft drive, he said. Xi’s campaign clamped down on the culture of gifting expensive items to government officials.
“When we started in China 20 years ago, people said we should start small, with smaller products.
“But we decided to come with ready to wear, couture, we wanted to start on the right foot,” said the 65-year-old Toledano, who has been leading the company since 1998.
“We have a good positioning and we continue to serve the new generation.”
In China’s luxury-goods market, which includes designer apparel, fine alcohols and luxury jewelry, the leaders are local distillers of the traditional Chinese grain liquor known as baijiu: Sichuan Jiannanchun Group and Kweichow Moutai Co, with about 2% of the market each.
Among foreign luxury labels, Louis Vuitton, Chanel, Richemont and Gucci all have an about 1% share, according to data from Euromonitor International. Dior trails with a 0.6% share in the country as of 2015, up from 0.4% in 2013.
The recent consolidation of control over Dior by LVMH’s Bernard Arnault, who offered minority shareholders 260 euros per share, will give the company more “fluidity” and align shareholders’ agendas, said Toledano.
The French billionaire was previously already chairman of Christian Dior with a 74% stake.
“It will give some kind of synergy, although I don’t like the word synergy because it means reducing staff,” Toledano said.
“I think we will hire more people and working in an even closer way with our LVMH colleagues.”–