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\]One afternoon in July, not long after being named the wealthiest man on the planet by Forbes, Bernard Arnault, the head of the LVMH Moët Hennessy Louis Vuitton luxury goods empire, took his place on a stage before a crowd of French dignitaries and reporters.
In the front row sat four of his five adult children — the fifth was watching from New York, where he is an executive at Tiffany & Co. Their father had raised all of them to one day run the LVMH conglomerate.
LVMH chief Bernard Arnault, with wife Helene, has been working to make sure his company — created by gobbling up many European luxury houses that had been weakened by bickering family owners — will stay firmly in his family’s hands.Credit: AP
The occasion was Arnault’s announcement that LVMH would provide €150 million ($248 million) to sponsor the 2024 Paris Olympics. LVMH companies will play a starring role. Chaumet, a Paris jeweller, will design the Olympic medals, and Moët Hennessy wines will flow in hospitality suites.
“The partnership will help promote France throughout the world,” Arnault declared. As television cameras zoomed in, his eldest son, Antoine, the head of communications and image for LVMH, uttered what could be a tagline for this huge company his father has built: “For a dream, there is no price.”
It was a moment of public triumph for Arnault, a sign of how embedded in the fabric of France LVMH has become. Over more than 30 years, he has forged LVMH into the world’s largest luxury group and the most valuable company in France, with a presence in 81 countries. His brands — 75 of them — are the stars of the luxury world, including Louis Vuitton, Christian Dior, Tiffany and Dom Pérignon Champagne.
But his success has brought challenges. In France, Arnault has become a lightning rod for anger over growing economic inequality. In April, 10 days after Forbes put him atop its annual list of richest people, protesters stormed his office in Paris during nationwide strikes over raising the retirement age.
And in recent months LVMH’s stock has taken a beating, down 19 per cent since hitting a high in April. The company reported a dip in US sales in the second quarter, and the Chinese economy, a big source of LVMH’s revenue, is faltering.
At 74, Arnault has been working to make sure his company — created by gobbling up many European luxury houses that had been weakened by bickering family owners — will stay firmly in his family’s hands. Last year, he persuaded the board to raise the mandatory retirement age for the CEO and chair to 80, from 75, and created a corporate structure that ensures the family’s control of LVMH, locking in his children — each of whom has been named to highly visible positions within the company — as the chief decision-makers.
Arnault’s changes mean he doesn’t have to retire next year as originally expected. That hasn’t stopped speculation about whether he can ensure that his heirs avoid a Succession-like drama. (The French media is full of headlines comparing the Arnaults with the Roys, the fictional family in the HBO series. The family hates this talk, and takes pains to play down parallels to the show.)
At 28, Frederic Arnault is the CEO of Tag Heuer.
The eldest sibling is Delphine, 48, chair and CEO of Christian Dior Couture and a member of the LVMH executive committee and its board. Antoine, 46, is not only in charge of the group’s image and sustainability efforts but CEO of its menswear brand Berluti, chair of the Italian luxury house Loro Piana, CEO of Christian Dior SE and a member of the LVMH board. Both are from Arnault’s first marriage, to Anne Dewavrin. The youngest three are from Arnault’s second marriage, to Hélène Mercier, a Canadian concert pianist: Alexandre, 31, is executive vice president of product and communications at Tiffany; Frédéric, 28, is CEO of Tag Heuer; and Jean, 24, is Louis Vuitton’s watch director.
In a rare interview in LVMH’s headquarters in Paris, Arnault brushed off any comparison with television’s Roys.
“It’s not an obligation, nor inevitable, that a kid is my successor,” he said. “The best person inside the family or outside the family should be one day my successor. But it’s not something that I hope is a duel for the near future.”
Every month, the five siblings meet with their father over lunch on the top floor of LVMH’s headquarters.
For an hour and a half, they discuss business, including finances, upcoming product introductions and the social media payoff of over-the-top events. For example, a Vuitton menswear show by the brand’s new designer Pharrell Williams attracted such names as Kim Kardashian and LeBron James, resulting in over 16 million YouTube hits.
“Make no mistake,” Jean said. “We discuss things, but at the end, it’s he who decides.”
Amid the bonhomie, the siblings say, Arnault is gauging how each of his children is measuring up.
A graduate of France’s elite École Polytechnique, Arnault honed his children’s math skills nearly every night before dinnertime. Antoine recalled that getting anything less than a perfect grade on important exams “wasn’t acceptable.”
Ian Rogers, a former chief digital officer at LVMH, said Alexandre had told him, “My business education started when I was 9, at the breakfast table.”
By age 10, Delphine was accompanying her father to Dior stores. He has made weekend inspections of LVMH properties in Paris with his children a routine for more than three decades.
The father paired each of his children with a mentor as they entered the business, to teach them the brands and monitor their performance. Delphine and Antoine started in novice positions before ascending to the C-suite. The three youngest moved more quickly into senior roles, “probably because he feels time is running out and he needs to speed up the process of learning,” said Pierre-Yves Roussel, a former chief of the LVMH fashion group and the current CEO of Tory Burch.
All of them understand that the family itself is now as much a brand as the brands they own, and have wasted no time making their presence known.
In less than two years at Tiffany, Alexandre helped seal a deal with Beyoncé and Jay-Z, creating a social media sensation. (In 2016, Alexandre persuaded his father to acquire Rimowa, a German maker of aluminum suitcases, which was founded in 1898. He immediately set about making the utilitarian luggage company cool.) Delphine created the LVMH Prize for Young Fashion Designers, a high-profile talent competition. And Antoine has thrown wide the previously closed doors of many LVMH companies with a series of “open days” that invite the public inside factories and workshops.
The question now is who can keep desirability at the heart of LVMH in an age of protests and global economic uncertainty.
Arnault insisted repeatedly during the interview that his main goal was not profits. “It’s desirability,” he said, “and we must make sure that in 50 years we are still at the top.”
“Desirability,” said Roussel, is the most popular word at 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 so much money out of it.’
“Is it desirable that you’re buying 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 biggest corporate titan, and reviled by others for his almost unimaginable wealth.
In April, as France’s nationwide protests gathered steam over President Emmanuel Macron’s bid to raise the retirement age two years to 64, demonstrators broke into the LVMH headquarters, denouncing Arnault as the embodiment of the ultrarich. “He is a symbol of what is wrong in this society!” one shouted.
“There’s the risk that none of us is able to run the business as well as he has.“: Alexandre Arnault, vice president of Tiffany & Co.Credit: Getty Images
The question now is who can keep desirability at the heart of LVMH in an age of protests and global economic uncertainty.
Last year, Arnault tinkered with the corporate structure of his empire, concentrating decision-making with his five children. Each has a 20 per cent stake, and they cannot sell their shares for 30 years without unanimous board approval.
His heirs “have been schooled by the best player in the world: All of them know the business,” said Sidney Toledano, head of the LVMH fashion group and one of Arnault’s longest-serving executives. “Are they going to be the pilots? Maybe.”
If the next CEO is not named Arnault, the children say they are OK with that. After all, Alexandre said, “there’s the risk that none of us is able to run the business as well as he has.”
This article originally appeared in The New York Times.
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