Bernard Arnault: who will inherit European luxury empire? – 09/20/2023 – Market

On a July afternoon, shortly after being named the richest man on the planet by Forbes magazine, Bernard Arnault, 74, head of the LVMH Moët Hennessy Louis Vuitton luxury goods empire, took the stage before a crowd of dignitaries and reporters. French.

In the front row were four of his five adult children — the fifth was watching in New York, where he is an executive at Tiffany & Co. Their father raised them all to one day run the LVMH conglomerate.

The occasion was Arnault’s announcement that LVMH would provide 150 million euros (about US$161 million, R$779 million) to sponsor the Paris Olympic Games in 2024. LVMH companies will play a leading role. Parisian jeweler Chaumet will design the Olympic medals, and Moët Hennessy wines will flow in hotel suites.

“The partnership will help promote France around the world,” said Arnault. As television cameras approached, his eldest son, Antoine, head of communications and image at LVMH, uttered what could be a slogan for the enormous company his father built: “For a dream, there is no price.” .

It was a moment of public triumph for Arnault, a sign of how embedded in the French structure LVMH has become. Over more than 30 years, he transformed it into the largest luxury group in the world and the most valuable company in France, with a presence in 81 countries. Its brands — 75 of them — are the stars of the luxury world, including Louis Vuitton, Christian Dior, Tiffany and Dom Pérignon Champagne.

But his success came with challenges. In France, Arnault became a lightning rod for anger at growing economic inequality. In April, ten days after Forbes named him at the top of its annual list of the richest people, protesters stormed his Paris office during nationwide strikes to raise the retirement age.

And in recent months, LVMH shares have suffered another drop, reaching 19% since reaching their peak in April. The company reported a decline in U.S. sales in the second quarter, and the Chinese economy, a big source of revenue for LVMH, is faltering.

At 74, Arnault has worked to ensure that his company — created by devouring many European luxury houses that were weakened by disputes between family owners — will remain firmly in family hands.

Last year, he persuaded the board to raise the mandatory retirement age of the CEO and chairman from 75 to 80, and created a corporate structure that ensures the family’s control over LVMH by locking in his children — all appointed to senior roles high visibility in the company—as key decision makers.

Arnault’s changes mean he will not have to retire next year as initially expected. That hasn’t stopped speculation about whether he can ensure his heirs avoid “Succession”-type drama — the French media is full of headlines comparing the Arnaults to the Roys, the fictional family in the HBO series, and the family hates that kind. of conversation and strives to minimize parallels with the show.

The older sister is Delphine, 48, president and CEO of Christian Dior Couture and a member of LVMH’s executive committee and its board. Antoine, 46, is not only responsible for the group’s image and sustainability efforts, he is also CEO of his menswear brand Berluti, president of Italian luxury house Loro Piana, CEO of Christian Dior SE and member of the board of directors from LVMH.

Both are from Arnault’s first marriage, to Anne Dewavrin. The three youngest are from his second marriage, to Canadian pianist Hélène Mercier: Alexandre, 31, is executive vice president of product and communications at Tiffany; Frédéric, 28, is CEO of Tag Heuer; and Jean, 24, director of watches at Louis Vuitton.

In a rare interview at LVMH headquarters in Paris, Arnault dismissed any comparisons with television’s Roys.

“It is not an obligation, nor inevitable, that a son will be my successor,” he said. “The best person in or outside the family should succeed me one day. But it’s not something I expect to be a duel in the near future.”

Every month, the five brothers meet their father for lunch on the top floor of the LVMH headquarters.

For an hour and a half, they discuss business, including finances, upcoming product launches, and the payoff of major social media events. For example, a Vuitton menswear show by the brand’s new designer, Pharrell Williams, attracted names like Kim Kardashian and LeBron James, resulting in more than 16 million hits on YouTube.

“Don’t be fooled,” said Jean. “We discuss things, but in the end he decides.”

Amid the bonhomie, the brothers say, Arnault evaluates the performance of each of his children.

A graduate of France’s elite École Polytechnique, Arnault honed his children’s math skills almost every night before dinner. Antoine recalled that scoring below the maximum in important exams was “not acceptable”.

Ian Rogers, former chief digital officer at LVMH, said Alexandre told him: “My business education began when I was 9 years old, at the breakfast table.”

At 10, Delphine accompanied her father to Dior stores. He has made weekend inspections with his children of LVMH properties in Paris a routine for more than three decades.

The father paired each of his sons with a mentor when they entered the business, to teach them the brands and monitor their performance. Delphine and Antoine started out in intern positions before moving up to executive level. The three youngest moved more quickly to senior positions, “probably because he feels time is running out and he needs to speed up the learning process,” said Pierre-Yves Roussel, former head of fashion group LVMH and current CEO of Tory Burch .

Everyone understands that the family itself is today as much a brand as the brands it owns, and they wasted no time in making their presence felt.

In less than two years at Tiffany, Alexandre helped close a deal with Beyoncé and Jay-Z, creating a sensation on social media. (In 2016, Alexandre convinced his father to acquire Rimowa, a German aluminum luggage manufacturer founded in 1898. He immediately set about making the utility luggage company “cool.”) Delphine created the LVMH Prize for Young Fashion Designers, a high-level talent competition. And Antoine has thrown open the previously closed doors of many LVMH companies with a series of “open days” that invite the public into factories and workshops.

Arnault repeatedly insisted during the interview that his main goal is not profit. “It’s desirability,” he said, “and we must ensure that 50 years from now we will still be on top.”

“Desirability,” Roussel said, is the most popular word in the company. But it highlights a potential problem, he said: “A consumer waking up and saying, ‘You know, I’m buying this product, but there’s someone making a lot of money off it.’

“Is it desirable for you to buy a product from someone who is the richest man in the world?”

In France, Arnault is a divisive figure: hailed by the business and political worlds for building the country’s greatest corporate titan, and reviled by others for his almost unimaginable wealth.

In April, as nationwide protests in France gained momentum over President Emmanuel Macron’s attempt to raise the retirement age by two years to 64, protesters stormed the headquarters of LVMH, denouncing Arnault as the embodiment of the ultra-rich. “He’s a symbol of what’s wrong in this society!” shouted one.

The question now is who can maintain the desirability at the heart of LVMH in an era of protests and global economic uncertainty.

Last year, Arnault changed the corporate structure of his empire, focusing decision-making on his five children. Each has a 20% stake and cannot sell their shares for 30 years without unanimous board approval.

The heirs “were educated by the best player in the world: everyone knows the business,” said Sidney Toledano, president of fashion group LVMH and one of Arnault’s longest-serving executives. “Will they be the pilots? Maybe.”

If the next CEO isn’t named Arnault, his sons say they’ll agree. After all, said Alexandre, “there is a risk that none of us will be able to manage the company as well as him.”

_{Translated by Luiz Roberto M. Gonçalves}