Table of Contents
Executive Summary
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- Global luxury goods market worth €70 billion in 2005
- Retail value closer to €100 billion
- Tightening control of distribution
- LVMH is the leading luxury goods company
- Europe is the largest luxury goods market
- Growth in US and Asia-Pacific continues to drive market
- Explosive growth in China
- Fashion and leather category the largest
- Investors increasingly attracted to luxury market
- Strong growth forecast for luxury market
The Global Luxury Goods Market
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- Report scope
- Terms and definitions
- Luxury goods – A definition
- Exchange rates
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- Figure 1: US Dollar to Euro exchange rates, 2001-05
- Regions
- Product categories
- Technical notes
- Financial definitions
- Other abbreviations
- Global luxury goods market size
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- Figure 2: Estimated global luxury goods market size and major players’ turnover, 2004-05
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- Figure 3: Global luxury goods market: Percentage of leading operators by domicile, 2005
- Regional breakdown
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- Figure 4: Global luxury goods market: Estimated value breakdown by region, 2005
- Figure 5: Global luxury goods market: Percentage breakdown, by region, 2005
- Europe
- North America
- Japan
- China
- Other markets
- Product breakdown
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- Figure 6: Global luxury goods market: Estimated product breakdown, 2005
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- Figure 7: Global luxury goods market: Estimated breakdown by major product category, 2005
- Perfumes and cosmetics
- Targeting younger consumers
- Male market – a growth area
- Anti-ageing products
- Fashion and leather goods
- Handbags driving the market
- Move to more muted tones
- Size matters
- Man-bags
- No-logo
- Watches and jewellery
- Watch trends
- Jewellery trends
- The 'Other Products' category
- Counterfeiting
- Counterfeit product market size
- Counterfeit luxury goods
- Counterfeit luxury goods buyers
- Brand control – battling against the counterfeiters
- Internet aiding the counterfeiting business?
- LVMH targets the merchants
- Fast fashion – imitation is the sincerest form of flattery?
- Corporate activity
- Major merger & acquisitions 2004, 2005 and first half of 2006
- Outlook and forecasts
- Outlook
- Will 2006 see a slowdown?
- Trends and market drivers
- Selected current trading data
- Macro-economic data
- Other data
- Forecasts
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- Figure 8: Global luxury goods market: Forecast, 2006-07 and 2010
The Luxury Goods Market – Demand Drivers and The Economic Cycle
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- Introduction
- GDP growth
- Slower growth in larger luxury goods markets
- Slowdown forecast for 2006 and 2007
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- Figure 9: Selected regional and national real GDP growth rates and forecasts, 2003-07
- Figure 10: Key luxury goods markets’ real GDP growth, 2004 and 2005
- Stockmarket fluctuations impact market growth
- Exchange rate movements also influence market
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- Figure 11: Relative performance of Yen against US$ and Euro, 2001-05
- The Yuan and the US Dollar
- Japanese consumers' global influence waning?
- Recovery in Japan continues in 2005
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- Figure 12: Japanese tourist departures, 1990-2007 (f)
- Chinese consumers becoming more important to luxury goods market?
- High Net Worth Individuals (HNWIs)
- HNWIs background
- More rich than ever before…
- …and they are getting richer
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- Figure 13: World: High Net Worth Individuals, 2001-05
- Increase in Asia-Pacific and North American wealth driving market
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- Figure 14: Number of High Net Worth Individuals by region, 2001-05
- North America recovery continues in 2004
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- Figure 15: Net worth of HNWIs, 2001-05
- 8.7 million millionaires
- Wealth forecast to 2010
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- Figure 16: Wealth forecast – HNWI average annual growth in financial wealth by region, 2005-10 (f)
Channels of Distribution
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- Introduction
- Control distribution and you control the brand
- Channel structure
- Brand boutiques
- Background
- Directly-operated vs franchised?
- DOS gaining ground
- Status quo
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- Figure 17: Luxury brands: Company-owned stores
- Jewellery
- Watches
- Emerging markets
- Market development/trends
- Stores communicate brand
- Location
- Demand for thrills
- Interaction with products
- The e-impact
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- Figure 18: Luxury brands: Websites, 2006
- Too accessible?
- No touching
- Boring functionality
- Taking control
- Outlook
- DOS trend continues
- Branded stores head East
- And revamp where established
- But at what cost?
- No avoiding the web
- Licensing
- What is a licence?
- The evolution of licensing
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- Figure 19: The evolution of licensing
- Return to control – different approaches
- 1) Pierre Cardin – over-extending the brand
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- Figure 20: Pierre Cardin – over-extending the brand
- 2) Gucci – taking back control
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- Figure 21: Gucci – taking back control
- 3) Burberry – striking a balance
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- Figure 22: Burberry – striking a balance
- 4) LVMH – keeping it in-house
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- Figure 23: LVMH – keeping it in-house
- Parallel imports
- Tesco vs. Levi’s case
- Louis Vuitton rations shoppers
- The pros and cons of licensing
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- Figure 24: Pros and cons of licensing
- Licensing versus integrated distribution
- Specialist manufacturing and distribution
- Perfumes and cosmetics
- Eyewear
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- Figure 25: Eyewear licensed brands, 2006
- The future of licensing
- Concessions
- Background
- Definition
- A mutually beneficial arrangement
- Department to destination store
- How to stand out?
- Market developments/factors
- Identity crisis?
- Showcasing luxury
- Threat from developing brands
- Brand control
- Safe entry vehicle
- Outlook
- The march of the brand boutique continues...
- …but concessions remain complementary
- Potential still remains
- Boost from accessories?
- The tax-free/duty-free market
- The global luxury goods tax-free retail market size
- Regional breakdown
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- Figure 26: Global duty-free sales of luxury goods, breakdown by region, 2004
- Product categories
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- Figure 27: Global duty-free sales of luxury goods, breakdown by major product category, 2004
- Growing market
- Airport retailing increasing its dominance
- Duty-free shopping
- History of duty-free
- Tax-free retailing
- Leading tax-free luxury goods retailers
- Outlook
Luxury Goods Product Markets
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- Introduction
- Background
- Product market sizes
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- Figure 28: Global luxury goods market: Estimated product breakdown, 2005
- Leather goods and accessories
- Background
- 'It' Bags
- Entry-level products
- Move towards even greater exclusivity
- Brand licensing
- Market size and trends
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- Figure 29: Global leather goods and accessories market: Estimated market shares, 2005 (e)
- Leading players
- LVMH
- Coach
- Gucci Group
- Prada
- Hermès
- Richemont
- Product trends
- Handbags continue to drive category
- Re-invention and updated classics
- Shape and colour trends
- Big bags
- Man-bags
- No logo?
- Counterfeiting
- Outlook
- Accessible accessories?
- Über Luxury segment growing
- Customisation
- Ready-to-wear and footwear
- Background
- History
- Definitions
- Are brands the real fashion victims?
- Market size and trends
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- Figure 30: Global ready-to-wear and footwear market: Estimated market shares, 2005
- Leading players
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- Figure 31: Global ready-to-wear and footwear market, brand stables and retail presence, 2005
- Polo Ralph Lauren
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- Figure 32: Polo Ralph Lauren: Turnover, by channel and region, 2006
- Tommy Hilfiger
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- Figure 33: Tommy Hilfiger: Turnover, by channel, 2004/05 and to end-2005
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- Figure 34: Tommy Hilfiger: Brands, 2006
- Max Mara
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- Figure 35: Max Mara: Brands, 2006
- Armani
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- Figure 36: Armani: Wholesale turnover, by region and label, 2004
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- Figure 37: Armani: Brands, 2006
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- Figure 38: Armani Group: Direct retail network, as at end-December 2005
- Chanel
- Ermenegildo Zegna
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- Figure 39: Ermenegildo Zegna: Brands, 2006
- Escada
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- Figure 40: Escada brand sales, by region and segment, 2004/05
- Product trends
- Industry developments
- Luxury for the masses
- What is luxury?
- The industry strikes back?
- Faster
- Better
- (In)Accessible
- Customised
- The creative carousel
- Outlook
- ‘Fast fashion’
- Brand ‘stretching’
- Perfumes and cosmetics
- Background
- History
- Market size and trends
- Market structure
- Control over the distribution chain
- Market size
- Market shares
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- Figure 41: Global luxury goods market: Perfume & cosmetics sector, estimated market shares, 2005
- Leading players
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- Figure 42: Leading luxury goods perfume and cosmetics brands, 2006
- Estée Lauder
- Shiseido
- L’Oréal (Luxury Products Division)
- YSL Beauté
- Product trends
- Celebrity fragrances
- Targeting younger consumers
- Male market – a growth area
- Anti-ageing products
- Outlook
- Product innovation
- Opportunities in emerging markets
- Expanding niche customer markets
- Luxury watches and jewellery market
- Background
- History
- Two closely-related markets
- Market size and trends
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- Figure 43: Leading luxury jewellery and watch brands, 2003 and 2005
- Watches
- Leading players
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- Figure 44: Luxury watchmakers acquisitions
- Rolex
- Swatch Group
- Other brands
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- Figure 45: Other luxury watch brands
- Regional trends
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- Figure 46: Distribution of Swiss watches, by region, 2004-05
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- Figure 47: Global distribution of Swiss watches, by major regions, 2005
- Figure 48: LVMH watches and jewellery division, sales by region, 2005
- Product trends
- Jewellery
- Leading players
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- Figure 49: Re-invention and reinvigoration of high-end jewellers
- Product trends
- Outlook
- China’s growing affluence targeted
- Product innovation
- Differentiation
Major Company Profiles
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- Burberry
- Background
- Repositioning
- Financial data
- Five-year summary
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- Figure 50: Burberry Group: Financial data, 2001/02-2005/06
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- Figure 51: Burberry Group: Turnover by regional market, 2001/02-2005/06
- Full year 2005/06
- Outlets
- Retail expansion
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- Figure 52: Burberry Group: Outlet data, 2002-06
- Presence by country
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- Figure 53: Burberry Group: Outlets by region, 2002 and 2006
- Impact of company owned stores
- Japan
- Channels of distribution
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- Figure 54: Burberry Group: Turnover by channel, 2001/02-2005/06
- Products
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- Figure 55: Burberry Group: Turnover by product category, 2005/06
- Clothing
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- Figure 56: Burberry Group: Fashion brands
- Clothing icons
- Accessories
- The ‘It’ bag category
- Logo
- Footwear
- Home
- Fragrances
- Advertising
- Online presence
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- Figure 57: Burberry Group: Websites, April 2006
- Outlook
- Gucci Group
- Background
- Turnaround
- PPR ownership
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- Figure 58: Gucci Group: Brands
- Group financial data
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- Figure 59: Gucci Group: Financial data, 2001/02-2005
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- Figure 60: Gucci Group: Turnover by brand, 2001/02-2005
- Figure 61: Gucci Group: Turnover by region, 2003-05
- Group outlets
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- Figure 62: Gucci Group: Outlet data by brand, 2001-05
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- Figure 63: Gucci Group: Outlet data by country, 2001-05
- Products
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- Figure 64: Gucci Group: Group turnover by product category, 2002/03 and 2005
- Major brand divisions
- Gucci
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- Figure 65: Gucci division: Sales by geographic location, 2005
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- Figure 66: Gucci division: Sales by product category, 2003-05
- Yves Saint Laurent
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- Figure 67: Yves Saint Laurent: Turnover by product group, 2005
- YSL Beauté
- Bottega Veneta
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- Figure 68: Bottega Veneta: Geographical breakdown of sales, 2005
- Other operations
- Emerging brands
- Online and mail order
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- Figure 69: Gucci Group: Group websites, 2006
- Outlook
- LVMH Holding
- Background
- Louis Vuitton + Möet Hennessy = LVMH
- Arnault teams up with Guinness to take control
- LVMH grows through acquisition
- Group structure
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- Figure 70: Christian Dior/LVMH ownership structure, 2005
- Christian Dior Couture
- Financial and outlet data
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- Figure 71: Christian Dior Couture: Financial data, 2001-05
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- Figure 72: Christian Dior Couture: Revenue by business sector, 2001-05
- Figure 73: Christian Dior Couture: Retail revenue by geographical location, 2001-05
- Products/design strategy
- LVMH brand portfolio
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- Figure 74: LVMH: Owned brands, by division, as at 31 December 2005
- Group financial data
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- Figure 75: LVMH: Group financial data, 2001-05
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- Figure 76: LVMH: Group sales, by region, 2005
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- Figure 77: LVMH: Group outlet data, by division and region, 2001-05
- Review by division
- Fashion and leather goods
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- Figure 78: LVMH: Fashion & leather goods division, financial and outlet data, 2001-05
- Figure 79: LVMH: Fashion & leather goods division’s sales breakdown, by region, 2001 and 2005
- Louis Vuitton
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- Figure 80: LVMH: Louis Vuitton, Sales growth and outlet data, 2001-05
- Fendi
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- Figure 81: LVMH: Fendi outlets, 2001-05
- Berluti
- Kenzo
- Givenchy
- Marc Jacobs
- StefanoBi
- Emilio Pucci
- Thomas Pink
- Donna Karan
- eLuxury.com
- Perfumes and cosmetics
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- Figure 82: LVMH: Perfumes and cosmetics division, financial and outlet data, 2001-05
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- Figure 83: LVMH: Perfumes and cosmetics division sales, by region, 2001 and 2005
- Parfums Christian Dior
- Guerlain SA
- Parfums Givenchy
- Kenzo Parfums
- Laflachère
- BeneFit Cosmetics
- Fresh
- Make Up For Ever
- Acqua di Parma
- Perfumes Loewe
- Watches and jewellery
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- Figure 84: LVMH: Watches and jewellery division, financial and outlet data, 2001-05
- Figure 85: LVMH: Watches and jewellery division sales, by region, 2001 and 2005
- TAG Heuer
- Zenith International
- Benedom – Dior Watches
- Fred Joaillier
- OMAS
- Chaumet International
- De Beers LV
- E-commerce
- Outlook
- Richemont
- Background
- Financial data
- Richemont raises its performance
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- Figure 86: Richemont Group: Financial performance, 2001/02-2005/06
- Europe remains the group’s key market
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- Figure 87: Richemont: Sales by region, 2005/06
- Outlets
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- Figure 88: Richemont Group: Number of outlets, 2001-05
- Products
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- Figure 89: Richemont: Sales by product category, 2005/06
- Review by business segment
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- Figure 90: Richemont: Turnover by business segment, 2005/06
- Jewellery
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- Figure 91: Jewellery division: Financial performance, 2001/02-2005/06
- Cartier
- Van Cleef & Arpels
- Specialist watchmakers
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- Figure 92: Specialist watchmakers division: Financial performance, 2001/02-2005/06
- Jaeger-LeCoultre
- Piaget
- Baume & Mercier
- IWC
- Vacheron Constantin
- A. Lange & Söhne
- Officine Panerai
- Writing instrument manufacturers
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- Figure 93: Writing instrument manufacturers: Financial performance, 2001/02-2005/06
- Montblanc
- Montegrappa
- Leather and accessories
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- Figure 94: Leather and accessories: Financial performance, 2001/02-2005/06
- Alfred Dunhill
- Lancel
- Other businesses
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- Figure 95: Other businesses: Financial performance, 2002/03-2005/06
- Chloé
- Shanghai Tang
- James Purdey & Sons
- Outlook
- Hermès
- Background
- Financial data
- Robust performance in 2005
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- Figure 96: Hermès: Financial data, 2001-05
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- Figure 97: Hermès: Sales by major product category, 2002-05
- 2006 Q1 sales growth in the double-digits
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- Figure 98: Hermès: Sales by region, 1st Quarter 2006
- Outlets
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- Figure 99: Hermès: Stores by region, April 2006
- Products
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- Figure 100: Hermès: Product breakdown, Q1 2006
- Outlook
- Prada
- Background
- Group financial data
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- Figure 101: Prada Holding NV: Financial data, 2002/03-2005/06
- Outlets
- Products
- Outlook
- Business restructuring
- Church’s stake to be bought back?
- Prada’s flotation plans
- Tiffany & Co
- Background
- Financial data
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- Figure 102: Tiffany & Co: Financial data, 2001/02-2005/06
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- Figure 103: Tiffany & Co: Retail turnover by region, 2001/02-2005/06
- Outlets
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- Figure 104: Tiffany & Co: Outlet data, 2002-06
- Products
- Outlook
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