Frédéric Arnault is the new chief executive of LVMH Watches, effective Jan. 1, LVMH announced in a statement Friday.

The newly created role will see the second-youngest son of LVMH chairman and CEO Bernard Arnault oversee the conglomerate’s TAG Heuer, Hublot and Zenith brands, which have a combined turnover of around 1.6 billion Swiss Francs ($1.9 billion), Arnault told the Financial Times. (LVMH does not break out figures for its individual brands.)

Most recently, Arnault served as CEO of TAG Heuer, where he spearheaded efforts to push the brand further upmarket. In his new role, he will report into LVMH Watches and Jewelry Division chief Stéphane Bianchi.

The appointment has triggered an executive shuffle at the group’s watch brands. Julien Tornare, who has held the CEO role at Zenith since 2017, is succeeding Arnault at TAG Heuer. Benoit de Clerck, who joins the group from Panerai, is taking over at Zenith. Tornare, De Clerck, and Hublot chief Ricardo Guadalupe will all report to Arnault.

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The LVMH watchmaker has ‘reached milestones in brand transformation,’ said chief executive Frédéric Arnault in an exclusive interview with BoF.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.

After close to two years of conflict, the global diamond market is set to feel the full consequences of the war in Ukraine.

This week, the EU added the world’s biggest diamond producer, Russia’s Alrosa to its sanctions list alongside CEO Pavel Alekseevich Marinychev. The new year marked the start of an escalating series of export restrictions on Russian stones coordinated with the G7, which includes the US, UK, Canada and Japan, as well as EU members France, Germany and Italy.

Some countries had already imposed their own sanctions, but negotiating a comprehensive deal on diamonds proved difficult. Compared to products like oil, the sparkly stones are a relatively small money maker for Russia, figuring out a system to effectively police the market proved challenging and diamond traders in Antwerp, the Belgian port city that serves as a major trading hub for the precious stones, lobbied to slow restrictions on the lucrative business.

But now a comprehensive sanctions scheme has been agreed, it stands to push through seismic changes in the way the diamond industry operates, imposing new requirements for transparency and traceability in a sector that has historically operated with little of either.

“These sanctions have been in the works for two years now and it took this long because it’s that challenging to come up with a framework that everyone in the industry can effectively adhere to,” said diamond industry analyst Paul Zimnisky.

What Do the New Sanctions Do?

Though the US and UK banned direct imports of rough diamonds from Russia shortly after the war began, stones cut and polished elsewhere in the world have remained fair game until now.

But as of the start of January, the EU and G7 have banned the direct purchase of non-industrial diamonds from Russia. These will be followed by further restrictions on the import of Russian diamonds processed in third countries starting in March. Come September, diamonds sold within the powerful group of countries will need to adhere to a certification scheme to verify where they came from. In Europe, jewellery and watches containing diamonds will be included too.

In other words, even if stones are sent halfway around the world for cutting and polishing, if they originated in Russia they’ll be banned from markets in Europe and the G7. And the industry will need to figure out how to prove where those stones originated.

How Will the Sanctions Work?

No one seems to really know yet. Diamond supply chains are long and complicated, with stones typically passing through dozens of hands in multiple countries before making it to market.

Keeping track of where stones originated while navigating this web of hard-to-police middlemen is notoriously difficult. That’s particularly true for the smaller diamonds Russia is known for producing, which are typically sold in large quantities and often mixed with stones from multiple places.

So far, the EU and G7 have only painted a broad outline of their plans for a system to trace and verify the origin of stones, with a pilot system set to be operational at the beginning of March. Industry groups including the World Diamond Council, Antwerp World Diamond Centre, the Gem and Jewellery Export Council of India and The Gemological Institute of America have been working together to develop an effective solution.

“It’s a bit of a work in progress,” said Morgane Winterholer, general manager of strategic brands and sustainability diamond manufacturer Dimexon. “At the moment it is extremely important that the roadmap needs to be developed.”

Technology could help. GIA is able to triangulate data gathered from a rough stone and match it to finished diamonds, but this still relies on documentation of where the stone came from to begin with. De Beers has developed a blockchain based traceability system known as Tracr. And a variety of other companies are developing their own offerings.

But none of these solutions are operating at scale and there’s currently no scientific method to trace a diamond right back to the mine.

What Does This Mean for the Industry?

The new sanctions will dramatically accelerate efforts to build traceability into the diamond industry in a way that will restructure supply chains that stretch around the world.

Big businesses have been preparing for the change. LVMH-owned Tiffany and Richemont both said they stopped sourcing Russian stones shortly after the war broke out. Dimexon has segregated its supply chain to ensure Russian stones don’t reach Western clients, tracking each transaction and relying on direct commercial relationships with mining companies to demonstrate the origin of each package of stones.

These changes have market ramifications too. Russia accounts for roughly one third of the world’s diamond supply, and while many of those stones will likely still end up sparkling in engagement rings, necklaces and tennis bracelets bought by consumers in countries outside of the new sanctions regime, those that fall under its reach account for nearly three quarters of global jewellery demand, according to Zimnisky.

“In the medium- to longer-term, there will be times the industry runs into supply shortages because of this,” he said.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Abercrombie’s 285 percent surge in 2023 makes it top performer in S&P 1500 Index. The strong showing, the retailer’s best since going public in 1996, is a sharp pivot from 2022, when its shares fell 34 percent. Shares of Abercrombie fell 4.7 percent this week as Friday capped a five-session losing streak, the stock’s longest since April.

Arc’teryx and Salomon owner Amer Sports files for US IPO. Amer Sports’ revenue was $3.05 billion in the nine months ended Sept. 30, compared with $2.35 billion a year earlier. Adjusted EBITDA, or core earnings, surged to $422.1 million versus $261.8 million.

Buy now, pay later plans fuel record online holiday shopping. Plans that let US consumers pay over time helped generate a record $222.1 billion in online holiday sales Nov. 1 through Dec. 31. Use of buy now, pay later financing plans hit an all-time high of $16.6 billion for e-commerce purchases in the last two months of 2023.

Next bullish on profit after festive surge. Next Plc raised its profit forecast for the fifth time since June. Next stock rose 4 percent in early London trading. The company expects a full-year pre-tax profit of £905 million ($1.1 billion).

JD Sports issues profit warning and blames weather for weak sales. The British sportswear retailer now sees pretax profit for the full year between £915 million ($1.16 billion) and £935 million, down from £1.04 billion previously. Shares fell 20 percent in early trading in London.

Thai retailer says it’s received no communication about Selfridges investment. In a statement Central Retail Corp. clarified it was not in discussions with its parent, Central Group, about any investment opportunity in the UK brand.

Bangladesh deploys army to keep peace ahead of Sunday’s election. The troops will only act on request from polling officers, the military said in a statement. People fear that the violence that has swept Bangladesh in the last two months could return after the poll.

Luxury stocks are set for a bleak earnings season, UBS warns. UBS analysts said slowing demand from Chinese shoppers and the absence of significant pick up elsewhere would weigh on sales. Investors expect this year to start on a weak footing before a revival toward the second half.

Rolex is raising UK watch prices, but its US pricing is unchanged. The Geneva-based watchmaker increased prices at dealers in the UK by an average of about 4 percent to start the year, according to a Barclays report.

Lululemon seeks distance from founder Chip Wilson’s diversity comments. Wilson told Forbes that Lululemon’s DEI efforts are an attempt to be mainstream, likening the company to The Gap. A Lululemon spokesperson said the company has made a concerted effort to improve the racial representation.

Aspen Skiing Company files federal lawsuit against luxury skiwear label Perfect Moment. The lawsuit alleges “trademark infringement, false association and/or false endorsement, and unfair competition.” The resort is also asking for compensation for profits incurred by Perfect Moment as well as unspecified damages and attorneys’ fees.

THE BUSINESS OF BEAUTY

Jaclyn Hill’s namesake cosmetics line to shut down. The influencer-fronted label is another casualty of parent company Forma Brands’ post-bankruptcy restructuring efforts. Forma Brands president Simon Cowell said the company’s new focus would be “product first, not “influencer first.”

Benefit Cosmetics to shrink China presence. The LVMH-owned company is shuttering much of its e-commerce presence in the country on Jan. 28, and will no longer be available at Tmall, JD.com or Douyin.

Eli Lilly warns against ‘cosmetic’ use of popular weight-loss drugs. Lilly did not outline any additional steps it is taking to prevent off-label use. The company also said it was concerned about knock-off versions of its medicines that have not been approved by the US Food and Drug Administration.

Walgreens profit beats Wall Street as sales rise amid cost cuts. Walgreens will almost halve its quarterly dividend to 25 cents a share, CEO Tim Wentworth said Thursday. The move will help increase cash flow, freeing up capital to invest in the pharmacy and health care businesses, he said.

PEOPLE

L’Oréal heir Francoise Bettencourt Meyers becomes first woman with $100 billion fortune. The milestone came as shares of L’Oréal SA rose to a record high, with the stock set for its best year since 1998. The move makes her the 12th richest person in the world.

Vogue appoints Raul Martinez as global creative director. In this position, Martinez will be responsible for the creative direction of all Vogue editions including international titles. He will also oversee the further integration of video storytelling into the magazine’s platforms.

MEDIA AND TECHNOLOGY

DLX to open London office. The Paris communications agency is opening its third location in London’s Fitzrovia neighbourhood. Sarah Johnson, former head of brand marketing and communications at Brown, will join the DLX team as co-founder and managing director in the UK.

Montana appealing ruling that blocked the state from barring TikTok use. Montana’s ban had been set to take effect Jan. 1 but a US district judge, issued a preliminary injunction to block the ban on Nov. 30. Montana Attorney General Austin Knudsen filed a notice that the state is appealing the ruling to the Ninth Circuit US Court of Appeals.

TikTok eyes $17.5 billion shopping business on Amazon’s turf. The social platform aims to grow the size of its US e-commerce business tenfold in 2024. Last year, TikTok was on track to amass around $20 billion gross merchandise value.

Compiled by Yola Mzizi.

Raul Martinez has been named global creative director of Vogue, parent company Condé Nast announced Friday. In this position, Martinez will be responsible for the creative direction of all Vogue editions including international titles. He will also oversee the further integration of video storytelling into the magazine’s platforms.

Martinez and Vogue have a long history: He first joined the title in 1988 as an associate art director and left the publication in 1996 to found creative agency AR New York. In 2009, he returned to the magazine and was named Condé Nast’s chief creative officer in 2015. He left in 2021 to join Victoria’s Secret as creative director.

Martinez will report to Anna Wintour, the global editorial director of Vogue and chief content officer of Condé Nast. He starts on Feb. 5.

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Victoria’s Secret Hires Condé Nast Creative Director Raul Martinez

Anna Wintour’s longtime right hand, creative director at the publisher of Vogue, Vanity Fair and GQ, is joining the lingerie giant as head creative director following the departure of its chief executive, John Mehas, in November.

Amer Sports on Thursday revealed a 30 percent revenue surge for the first nine months of 2023 in its filing to go public in the US, joining other high-profile firms looking to take advantage of recovering investor appetite.

US initial public offerings, which went through an arid period that lasted most of 2022 and 2023, are projected to rebound as the stock market hovers near record highs.

“We expect 2024 will look like a ‘normal year’, but after 2022 and 2023, normal might feel like a flood of IPOs,” said Matthew Kennedy, senior strategist at IPO-research firm Renaissance Capital.

Social media firm Reddit, cloud security company Rubrik and software startup ServiceTitan are also expected to go public in 2024 as fears of an economic downturn wane and investor sentiment recovers.

Founded in 1950, Amer Sports operates in three segments and is home to iconic sports and outdoor brands including Arc’teryx, Salomon, Atomic and Peak Performance.

Its world renowned Wilson brand is associated with several legendary athletes including Roger Federer, Russell Wilson and Jamal Murray. The Wilson tennis racket has been used by 643 Grand Slam title winners.

“It skirts a dual role between luxury and high-end sports brands that investors may find appealing, especially as people continue to crave and spend on experiential trips and vacations,” said Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors.

“Investors may see Amer sports as an alternative or diversifier to brands like Nike and Adidas,” Schulman added.

Wilson is also the official partner for a number of professional sports leagues, including the National Basketball Association and National Football League as well as the US Open and Roland-Garros Grand Slam Tennis Championships.

Amer Sports’ revenue was $3.05 billion in the nine months ended Sept. 30, compared with $2.35 billion a year earlier. Adjusted EBITDA, or core earnings, surged to $422.1 million versus $261.8 million.

“It looks like the company had a terrific 2023, in terms of both growth and EBITDA profitability. The enormous debt level is a turn off, but the IPO will help in that regard,” Kennedy added.

Founded in Finland, Amer went private in 2019, after a consortium led by China’s Anta Sports acquired it in a deal that valued it at more than $5 billion.

The Salomon ski boots maker did not reveal the price and size of its offering. Amer’s shareholders include Chinese conglomerate Tencent Holdings and private-equity firm FountainVest.

The billionaire founder of yoga-inspired athletic apparel company Lululemon Athletica, Dennis “Chip” Wilson, has been nominated to sit on its board in connection with the IPO, a filing showed.

Another supplier of major US sports league headware New Era Cap LLC has also kicked off preparations for an IPO in New York that could value it at $4 billion to $5 billion, Reuters reported in September.

It is looking to list on the New York Stock Exchange and trade under the ticker symbol “AS”. Goldman Sachs, BofA Securities, JPMorgan, Morgan Stanley, Citigroup and UBS Investment Bank are the lead underwriters for the offering.

By Manya Saini; Editing by Krishna Chandra Eluri

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The Gorpcore Empire Behind Salomon and Arc’teryx

Amer Sports plans to scale its three largest companies, including tennis racket maker Wilson, into €1 billion sportswear megabrands by cutting back on wholesale and leaning into their fashion appeal, without altering their core product offerings.