LVMH is a family affair says Bernard Arnault; shocked at internet attacks on its €200 million donation to Notre-Dame
LVMH is one of France’s most valuable conglomerates, and Bernard Arnault, its chairman, is Europe’s richest man, yet the luxury baron insisted on Thursday at the annual shareholders meeting that the behemoth of over 50 luxury marques is really just a family affair. Even as he expressed shock at internet attacks on LVMH’s decision to donate €200 million to the restoration of Notre Dame; and predicted that his group would soon have as many women executives as men managers.
In both an address to some 2,000 shareholders and while answering questions inside the Carrousel du Louvre exhibition space, Arnault also predicted that Hennessy brandy would soon become the world’s best-selling spirit, “all categories included,” and he raved about the “renewal of design talent” at LVMH’s three largest French fashion and accessories houses: Louis Vuitton, Christian Dior and Celine.
Arnault also revealed that Fendi would stage a special commemorative show devoted to creations by the late Karl Lagerfeld this summer in Rome. The deceased German couturier was the creative director of the Roman fur and fashion house for over five decades.
“It was with great sadness that we bid farewell to Karl, who was the heart and soul of this label. It is without a doubt the longest relationship between a label and a designer. In July, by the way, we will organize a runway show in Rome in tribute to Karl, reprising all his creations chez Fendi.”
However, he played dumb when asked directly in questions from the floor by FashionNetwork.com on his future plans for Rihanna. As reported, LVMH’s fashion group has created a company called Project Loud, apparently named after the singer’s fifth studio album. LVMH has also injected €60 million into the company and even named a president, LVMH executive Jean-Baptiste Voisin. Project Loud’s office is in the same building on rue Jean Goujon that houses LVMH’s fashion division.
“Yes, we are interested in Rihanna. You too I imagine. She’s an extraordinary singer. But you have surprised me, and as it’s a surprise, I cannot say more,” said Arnault, with a barely concealed wink to the members of his board, who flanked him on the rostrum.
However, he did confirm a further FashionNetwork.com question that Christian Dior had indeed acquired a large retail space at 127 avenue des Champs-Elysées, “which will be a pop up. It’s a temporary space which we will use during the work on our flagship at avenue Montaigne, which will undergo extensive renovation. I hope that when the work begins on our temporary space, that the problem of the yellow vest protests will be sorted out. If not, we will just have to wait a little.”
However, he denied recent reports that LVMH had discreetly approached possible buyers for Pucci, the colorful Florentine fashion house. “Oh, that doesn’t seem to be exactly right. The business is not for sale.”
And he declined requests that LVMH reveal the size of its stake in online agglomerator, Business of Fashion. BoF, as it is known, runs a disclaimer after all articles on LVMH, which reads: “Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.”
“Oh! That’s a tiny old investment which we made long ago,” said Arnault, flicking his hand, as if to brush some fluff off his lapel.
Even before Arnault spoke he was applauded. And he got an enormous burst of applause when one shareholder complimented him on the group’s donation of €200 million for the restoration of Notre-Dame.
“There has been a false polemic on the web about this. We don’t get any tax break from this. It’s a false polemic. But it’s quite disconcerting that in France, one gets criticized even when one does something to help something in the general interest. Unfortunately, this has been subject of criticism on some TV shows where pettiness reigns rather than the search for the common good. For me, Notre-Dame is a unique church and an eternal symbol of France,” he sighed.
By any standards, LVMH’s 2018 results were impressive: sales of almost €47 billion; with over €25 billion alone in the second six months. Moreover, in the opening quarter of 2019, the group enjoyed 16% growth in sales to €10.854 billion.
In a financial presentation, its CFO Jean-Jacques Guiony noted that LVMH’s two key markets remain China and the USA, with 29% and 24% of total sales respectively. The two key divisions within LVMH, which includes a stable of some 50 luxury brands, are Fashion and Leather Goods, with €15.472 billion in turnover (up 21%) and Selective Distribution, led by beauty retailer Sephora, at €13.311 billion (up 29%).
Net profit also rose by 18% to €6.354 billion, while operating profit rose to €10.003 billion, meaning an increase of nearly €2 billion. That left LVMH with relatively modest levels of debt, just €5.487 billion, and able to boast €5.4 billion in cash flow, all the better to fund future acquisitions. The AGM also approved a dividend of €6 per share, which Guiony noted means “that each year we try share with shareholders half of our net profit.”
Taking the rostrum, Arnault, dressed in a navy blue suit, with his Legion of Honor pin prominent on the lapel, raved about the “exceptional performance by Louis Vuitton.”
“For the first time, the brand has passed turnover of over €10 billion,” beamed Arnault, though coughing occasionally.
The executive lauded “the renewal at many of our fashion houses,” and several brands’ “exceptional shows,” along with the arrival of Virgil Abloh as the menswear designer of Vuitton.
“Nearly every product he has made have already largely sold. His products sell like bottles of Romanée Conti and with the quality of Vuitton. And within a few hours they are sold for much more on the web. That is not our goal, but it shows the success of this unique produce!” enthused Arnault.
After praising youth, in an aside, he praised the value of experience in his management team. “Personally, when I get on a plane I prefer the pilot to have white hair rather than have someone very young,” he joked, to much amusement.
Turning to Christian Dior, the luxury billionaire hailed a “very successful performance, adding that “Pietro understands our creative director well, as they are both Italians,” referring to CEO Pietro Beccari and women’s designer Maria Grazia Chiuri; while also extolling the menswear designer Kim Jones as “working so well.”
In a playful mood, he chimed about the success of the Dior exhibition in the V&A in London: “So many people wanted to see it, they had to extend it. Which made Pietro happy as the museum even asked to pay!” drawing a burst of laughter from the rather elderly audience.
“Another very important development was arrival of Hedi Slimane, under the management hands of Sidney Toledano. It has been a great success. He is an exceptional creator, who at Dior Homme achieved worldwide success. His latest men’s show in Place de la Concorde was sensational. There is already a waiting list for products. We hope we are able to produce enough,” laughed Arnault.
Finally, he lauded Jonathan Anderson, the designer of Loewe, for bringing “stunning growth with this brand.”
Elsewhere, he had warm words for the “dynamic development” of Dior Parfums; and the “beautiful performance and market share gains” of Italian jeweler Bulgari. “Its ultra-flat watches are incredible and have won all the prizes for watches in Switzerland!” Brand eulogy followed brand eulogy; Sephora with “an incredible performance” having opened about 100 new stores and seeing huge success in China; or Bon Marché for “leading retailing in Paris.”
Turning to hotel chain Belmond, of which LVMH completed the acquisition last week for $3.2 billion, Arnault explained the diversification in the following manner.
“These hotels that you may know are magnificent – the Cipriani in Venice, the Splendido in Portofino or others in Sicily. Remarkable hotels that, yes, will need some investment. They are part of our goal to search for experiences that interest many of our clients today. They want not just the best quality products – but also experiences,” he argued.
Though his voice was warmest when speaking of the Fondation Louis Vuitton, thrilled that over 5 million people have visited the Frank Gehry art space since it opened in 2014. Currently it is staging ‘The Courtauld Collection: A Vision for Impressionism.’ “More people are queuing to see the painting of Van Gogh with his jaw broken there than the Mona Lisa in the Louvre at the moment!” he crowed.
However, he became somewhat incensed when asked about black market sales of counterfeit luxury products.
“We worked hard on getting the police to stop this scourge, financed by badly frequented milieu, some of them practically terrorists. It’s a plague that hurts all French and European brands. We asked the state to stop these sales on the beaches of the South of France. They would arrest these people with backpacks pull of fakes, but then let them go after just four hours. But now we’ve got the state to seize the products – and these people never circulate anymore! But when we cross the border into Italy they still circulate freely, as we have not managed to convince the Italian government to do the same thing,” he snorted.
Looking ahead, Arnault announced his now-familiar warning about the need for “vigilance,” even as he predicted the continued growth of a new generation of consumers.
“The key word in our group is desire and ‘how do you create desire?’ I am very optimism in the long term – but we need to be aware that the almost euphoric growth worldwide might continue for at least another decade but it won’t last forever... We are investing continually in France – and we will always emphasize an extreme attention to quality. We could grow faster but must never pass the point where our products will suffer in quality… And, LVMH has again been voted the most attractive employer in France!” he opined.
“Our group has a family element – it is not managed by an anonymous group. But by a family, as indeed all these houses within LVMH started as a family. And, that’s the family spirit that we want to maintain,” said Arnault, three of whose children, Delphine (general director of Vuitton); Antoine (CEO of Berluti and president of Loro Piana) and Alexandre (CEO of Rimowa) all sat front row.
It has been estimated that the Arnault Family Group, the holding company of Bernard Arnault, controls some 47% of LVMH's stock and 63% of its voting rights.
And, one could also not help noticing that of the half-century of LVMH brands, the giant backdrop featured barely a dozen: a Vuitton dress worn by actress Alicia Vikander; Berluti shoes; a Rimowa suitcase; Dom Pérignon and Hennessy bottles; Dior bags; a Sephora store entrance; and the Fondation Louis Vuitton.
Only Delphine, however, sits on the LVMH Executive Committee, which duly took its place for the question session, sitting on plush armchairs. Rather oddly, only Arnault answered queries, even when they were addressed directly to several of his CEOs. Apart from Delphine, the board is all-male, except for Chantal Gaemperle, head of human resources.
Nonetheless, Arnault insisted: “Parity (within LVMH) between men and women managers will be reached soon!”
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