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Bernard Arnault (&Amp; F...
Bernard Arnault (& Family) behind LMVH just took the top spot on Forbes richest person list with a net worth of $185B. Here's a breakdown of the luxury empire:
Note: Thread
The LVMH luxury conglomerate bring in $60B+ a year, employs 160k people and owns 75+ brands: ◻️ Fashion (LV, Celine, Fendi) ◻️ Wine & Spirits (Krug, Hennesy, Belvedere, Moet) ◻️ Perfumes (Dior, Guerian) ◻️ Watches & Jewelry (Tiffany's, Hublot, Tag Heuer) ◻️ Retail (Sephora)
Arnault’s story begins in 1949, born in Roubaix, France (2hrs from Paris) His family owned a civil engineering company. After graduating from École Polytechnique (France’s top engineering school), he began work for the family firm. By 25, he was in charge.
In 1981, Arnault moved to NY w/ ambitions to grow the business beyond construction. In a cab ride, Arnault asked the driver if he knew who France's president was...he said 'no, but I know Christian Dior.' This inspired Arnault to build an international empire. (View Tweet)
Dior actually went up for sale in 1984. Arnualt bought Dior's struggling parent Boussac for $15m and fixed the business. At the same time, fashion house Louis Vuitton merged w/ spirits company Moet Hennessy to form LVMH. LVMH owned Dior's perfume business and Arnault wanted it.
For much of the LVMH merger, Louis Vuitton and Moet Hennessy leaders were at odds. Arnault played them off of each other and was invited in as an investor with the Moet team. He floated 42% of Dior to the public to get $520m in cash and ended up buying ~20% of LVMH.
At the time, LVMH was doing $2B in revenue and owned the world’s #1 champagne and #1 cognac. Louis Vuitton itself was founded in 1854 as a trunk luggage company. Its unmistakable monogram logo was created by George Vuitton (son of founder Louis) to fight off counterfeits.
By 1989, Arnault put up another $1B+ to buy a controlling stake in LVMH. Not used to such naked corporate ambition, the French media labeled him “The Wolf in Cashmere”. Arnault would embark on an acquisition spree, saying "in business, the secret is to seize opportunities."
In the decades since, Arnault has shown an incredible ability to allocate capital. Bringing in top brands and letting them operate independently: 1988: Celine 1993: Berluti, Kenzo 1994: Guerlain 1996: Loewe 1997: Marc Jacobs, Sephora 1999: Thomas Pink 2001: Fendi, DKNY
The shopping spree hit huge numbers in recent years: 2011: $5B for Italian jeweller Bulgari 2013: $2.6B for fine-wood purveyor Loro Piana 2019: $3.2B for hotel group Belmond 2020: $16B for jeweller Tiffany's (biggest deal ever)
Arnault's strategy for acquisitions is to look for "stars", of which he says you can "count on two hands" in the luxury business. Here are some reasons these brands agree to his offers:
Even when rebuffed he wins: ◻️ A failed 1999 bid to acquire GUCCI (dubbed "handbag war") netted him $700m ◻️ In the 2010s, he secretly built up a 17% stake in HERMES using cash-equity swaps but the family-owned business said "no"...still, he exited his position w/ a $5B gain
One luxury exec says Arnault combines "Wall St ways" with "generational" thinking. Many of the LMVH brands go back centuries, making their appeal near impossible to replicate. His main thought for each brand is "will this be desirable in 10 years".
To stay trendy, Arnault seeks young talent like Rhianna, Stella McCartney and Virgil Abloh (RIP). "When you run a fashion house, you're looking at the future, not the past. To attract new clients you have to take risks. Designers, like painters, are more creative [in the 30s]."
The LVMH edge ◻️ Brands take a long time to build (many 100yr+ brands) ◻️ Very expensive to launch luxury retail footprint ◻️ Control (Arnault owns 47% LVMH and 63% of voting) ◻️ Carefully manage supply + team of 1000s enforcing copyrights ◻️ Owns manufacturing + distribution
Arnault says of the LVMH brands: "They have two aspects, which may be contradictory: They are timeless and the utmost level of modernity" LVMH is now a $360B+ luxury empire (its stock is up ~5x over the past decade). The Arnault family owns 47%, making up most of their fortune.
If you enjoyed that, check out my Saturday email on business and tech. As you can see by my logo, it's a very luxury content. https://t.co/NW4pWGFlhd (View Tweet)
Side note: Louis Vuitton is LVMH's most valuable brand responsible for ~25% of sales. The logo design gets ripped off so much that the company employs 100s of people to track down IP infringement. Not all LV knock-offs are made equal, though.
Sources LVMH: https://t.co/he9PDeFLgb NYT: https://t.co/Yc8MdD6HCe Forbes: https://t.co/HLie95Fx9j This great thread: https://t.co/wmBOQWccVN (View Tweet)
Fun fact: Arnault invested $30m into Netflix in 1999. Not sure at what valuation (or how long he held) but Netflix IPO’d in 2002 with a ~$300m market cap. 🔗 https://t.co/0yedVZXxVX
