Comment: LVMH's Tiffany deal is not the guaranteed sparkler Bernard Arnault thinks

No doubt Bernard Arnault is surrounded by acolytes. The LVMH tycoon is, after all, the most powerful man in that most obsequious of businesses — fashion — and a billionaire to boot.

After today’s Tiffany takeover, he may wish he’d had someone whispering in his ear that he’s mortal.

For now, all you hear from the industry is after-party applause and clinking of champagne flutes. The fashionistas trill how the mighty Arnault will surely repeat the trick he pulled off with the 2011 takeover of Bulgari, driving a tiring brand relentlessly upmarket, improving both turnover and profit margins.

The reality is far less certain.

Tiffany’s is a far cry from Bulgari. For starters, it is far bigger than anything LVMH has ever bought. The $16.2 billion price tax dwarfs the €4.3 billion Bulgari deal.

Integration of such a huge merger carries massive risk.

The purported plan to boost Tiffany’s margins by moving it exclusively upmarket is no easy task. Currently, a fifth of Tiffany’s sales are in lower-end silver jewellery. That’s a lot of cashflow to sacrifice. Meanwhile, developing high-end product lines to justify a new status as a super high-end brand will take years, and hundreds of millions of euros.

Tiffany is also a far better-run business than Bulgari was. Disappointing earnings lately have been largely due to weak China demand and other macro-economy factors out of Tiffany’s control.

They’ll be out of Arnault’s control, too. It may not be long before the deafening applause at today’s deal begins to falter.