Explore the luxury of Louis Vuitton (LVMH)

Moët Hennessy Louis Vuitton (LVMH), commonly known as LVMH, is a French multinational conglomerate headquartered in Paris. It is the largest luxury goods group in the world with 75 luxury brands, including Louis Vuitton, Christian Dior, and Tiffany & Co. It is unique in the way that its subsidiaries cover all five sectors of the luxury goods market: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewellery, and selective retailing.

History of Louis Vuitton

First steps

The early beginnings of LVMH can be traced back to 1987 when the head of Louis Vuitton, Henri Recamier, announced the merger of Moët Hennessy and his company.  Moët Hennessy was also established after Moët & Chandon merged with Hennesy in 1971. Later, Recamier was replaced by Bernard Arnault in a hostile takeover.

As the CEO of LVMH, Arnault focused on boosting growth and acquired several luxury brands including Christian Lacroix, Givenchy, and Kenzo, leather goods companies such as Loewe, Celine, and Berluti, jeweller Fred Joaillier, and retailers Sephora and duty-free chain DFS Group. This helped increase LVMH’s revenue 500% from 2005 to 2022, and the company announced annual profits of more than €20 billion.

Who is Bernard Arnault?

Bernard Arnault was born in 1949 in Roubaix, France. After graduating from the École Polytechnique in Paris with a degree in engineering, he took control of his father’s construction firm Ferret-Savinel. Later he renamed the company to Férinel Inc. and moved towards real estate.

But Arnault had bigger plans, and this is when he moved into the fashion industry where he purchased the then bankrupt textile company Boussac Saint-Frères. In 1987, Henri Racamier invited Arnault to invest in LVMH, but by 1990 Arnault ousted Racamier and proceeded to buy more luxury brands. He soon became known as the man who revitalised French couture and was dubbed the “Pope of Fashion” in 1996. A year earlier, in 1995 he appointed British fashion designer John Galliano to replace Hubert de Givenchy at the eponymous fashion house.

Galliano was then moved to Christian Dior and British designer Alexander McQueen replaced him at Givenchy. American designer Marc Jacobs was appointed creative director at Louis Vuitton, while LVMH purchased a majority stake in Jacobs’s eponymous line. While all three designers would later move on to do their own thing, Arnault succeeded in injecting new life into traditional fashion houses with his choices and business acumen. 

Later Arnault would acquire more luxury brands such as Fendi (2003), French department store La Samaritaine (2010), Italian jewelry brand Bulgari (2011), and Tiffany & Co. (2021). He built the Fondation Louis Vuitton (2014), a contemporary art museum and in 2007 he was recognised with the prestigious title of Commander of the Legion of Honour.

Louis Vuitton and Scandals

While Louis Vuitton has been very successful, it has also attracted attention for its various scandals, including lawsuits, when he ousted Recamier and when he tried to withdraw from buying Tiffany & Co. Accusations in 2011 targeted Christian Dior designer Galliano who made racist insults in a Paris café and was later fired. In 2021, a criminal probe showed that LVMH employed a French intelligence chief who was accused of spying for the company and the claims were settled with LVMH paying €10 million.

Luxury goods stocks push France’s Cac 40 higher

Stoxx Europe 600 rose to the highest level since January 2022 after positive LVMH earnings. According to a Financial Times’ article (26 January 2024), Louis Vuitton and other luxury goods companies lifted European stocks to multiyear highs. LVMH reported strong fourth-quarter sales, and increased hopes of the sector’s booming prospects.

France’s Cac 40 rose 2.3% while London’s FTSE 100 added 1.4%. The Stoxx Europe 600 rose 1.1% and reached its highest level since January 2022.LVMH shares rose 12.8% after the company announced its turnover increased 10% in the three months to December, beating expectations and easing concerns about the impact of an economic slowdown in China.

Barclays upgraded European luxury stocks to overweight. The bank’s head of European equity strategy, Emmanuel Cau, explained that while luxury stocks lagged behind the broad market rally of November and December, they are now back.

Analysts have been less confident about luxury goods’ performance as they believe the key to performance this year and next year is China. Jelena Sokolova, a senior equity analyst for Morningstar, said: “The Chinese do have the savings, [but] they still are not travelling to Europe to the same extent as they did before Covid. They could spend more if they felt a little more secure about their future.”

Bernard Arnault names 2 more sons to LVMH Board

Looking forward the future, LVMH’s direction will continue to be spearheaded by the Arnault household. France’s richest man has planned his succession strategy and has recently announced that he has nominated two more of his children to sit on the company board. The appointments, once they are approved will solidify Arnault’s family as the leaders of the luxury brand, as it would mean four of his five children will sit on the board.

He nominated  executive vice president of product and communications at Tiffany & Company, Alexandre Arnault, who is 31, and Frédéric Arnault, 29, who is currently chief executive of Tag Heuer. They would join their other two siblings, Delphine, 48, who is chairman and chief executive of Christian Dior Couture, and Antoine, who is 46 and runs multiple LVMH brands. The youngest sibling, 25-year old Jean is Louis Vuitton’s watch director.

Arnault said: “As I have always said, LVMH is a family-run group,” and the two brothers “will each bring interesting perspectives.”

Mr. Arnault created a conglomerate by acquiring European luxury brands that had lost power by the families that owned them, ensuring his own family runs them. He established a corporate structure that ensured that his children would remain the main decision makers. When asked about who of his children will succeed him, 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.”

In 2022, he lost his Forbes’ title as the world’s richest man, after LVMH’s share price plummeted. As the second richest person in the world, following Elon Musk, Arnault remains an influential and powerful figure, whose name will live on through his legacy and his children. With luxury remaining such a sought-after concept and with brands such as Tiffany’s and Loui Vuitton symbolising status and power, it is doubtful that LVMH will ever lose its glamour.

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