How Bernard Arnault became one of the richest men in the world.
Playing by the rules, tough acquisitions, and a cocktail of free creativity and skilful management made Bernard Arnault the owner of a $ 100 billion fortune. For 35 years, the businessman who deftly took over a bankrupt textile factory in France has become the helm of the giant LVMH empire, which sells luxury goods around the world. But Arno himself says that this is just the beginning. About the reasons for the success of “ the wolf in cashmere»:
On the Trump Field
One of the wealthiest businessmen on the planet began his career in the family business-his father’s engineering company Ferret-Savinel. Arnault quickly showed his acumen: in 1974, a 25-year-old young man persuaded the family to sell the industrial division and use the money to fully focus on the real estate market.
The bet was played. The company, renamed Ferinel, became a major player in the construction sector in Paris and opened a branch in the United States. The management of them was entrusted to Bernard. He was involved in the construction of resorts, hotels and residential complexes in Florida.
In addition to the money — and Arno earned about $ 20 million in a few years-the American tour gave him a real business education. He had carefully observed the M & A transactions in the US market and realized that it was better to act boldly and decisively. “If you need to do something, do it! The French have a lot of good ideas, but we rarely implement them, “ Arnault summed up the lesson learned.
It was in the 1980s. That is, at the same time that the current US President, Donald Trump, was also promoting his construction projects. According to Arno’s recollections, they crossed paths once in New York. In 35 years, Trump will rank him as a “great man” and open a Louis Vuitton leather bag factory in Texas with him.
The dossier on Bernard Arnault
Born in 1949 in the small town of Roubaix in northern France near the border with Belgium. He is now 72 years old
He graduated from the” X “ — the prestigious higher Polytechnic school-with a degree in engineering
In 1984, he left the construction business to lay the foundation for his own luxury goods empire
He is the President and Chairman of the Management Board of LVMH Group (Moët Hennessy-Louis Vuitton)
Owns 47% of LVMH shares
The state as of the end of July 2020 is estimated at $ 113.2 billion. Ranks third in the list of the richest people on Earth according to Forbes
In 2010, the size of his fortune was 27.5 billion dollars, in 2005–17 billion, in 2000–12.6 billion, in 1997–3.1 billion
Commander of the Legion of Honour, Knight Commander of the Order of the British Empire
He is married and has five children
The path of the pitiless Cuckoo.
Bernard Arnault’s favorite memory from the 1980s is a conversation with a New York taxi driver. The businessman asked the driver if he was in France and if he knew who the president of the republic was now. He couldn’t answer. “But I know Christian Dior,” the taxi driver said. According to the legend, which Arno himself reproduces, this episode was fateful.
A major manufacturer of textiles and diapers, Boussac, which owned the Christian Dior brand, went bankrupt. The French government was urgently looking for a buyer. The businessman promised to restore production and save jobs. In 1984, Arnault invested $ 15 million in the deal and attracted the investment company Lazard. She gave another 80 million. The deal closed, several thousand people lost their jobs, and the sale of most of Boussac’s assets brought Arnault $ 500 million. The legendary Christian Dior brand formed the foundation of the future luxury giant.
He acted brazenly — like an American, not a Frenchman. And got the nickname “the wolf in cashmere”. Arnault was making his dream come true “artfully and ruthlessly,” writes The Financial Times.
In 1987, two luxury market leaders — Moët Hennessy and Louis Vuitton-merged into the LVMH group. The corporation suffered from a rift in management: representatives of the luxurious families of Vuitton, Hennessy and Moe often could not agree and even sued each other. In ‘ 89, they found a compromise and invited Arno to lead the group.
He did not cement the team, but took advantage of the situation. With his own funds and the money of his partners from Lazard, Arnault acquired a 43.5% stake in LVMH. The deal gave him 35% of the votes on the board of directors. With the support of the Henessy and Moe families, he removed the Vuitton family representative, Henri Racamier, from management and took over the reins.
“Arno is like a cuckoo: he takes over other people’s nests instead of building his own,” the FT quotes Dana Thomas, who wrote the book “ How the Suite Loses its Luster.” The newspaper notes that Bernard Arnault also acted decisively in the course of transactions with Givenchy, the wine producer Chateau d’Yquem and the chain of Duty Free Shoppers stores.
According to estimates of the publication, for 35 years, he made about four dozen acquisitions. This allowed him to build the world’s largest luxury business empire.
LVMH dossier.
Capitalization (end of July 2020): 204 billion euros
Share price (end of July 2020): 404 euros
Over the past 10 years, the company’s shares have risen in price 5 times
Net profit at the end of 2019: 7.2 billion euros (+13% by 2018)
Revenue: 53.7 billion euros (+15%)
Assets: 96.5 billion euros (+30%) LVMH
consists of 75 brands, they are distributed in six areas:
Clothing and leather goods
— Christian Dior, Louis Vuitton, Givenchy, Kenzo, Berluti and others
- 41% of revenue (22.2 billion euros)
Retail trade
- Sephora, Le Bon Marché, Duty Free Shoppers and others
- 28% of revenue (14.8 billion)
Perfumes and cosmetics
- Marc Jacobs Beauty, Acqua di Parma, Guerlain and others
- 13% of revenue ($6.8 billion)
Wines and spirits
— Hennessy, Ruinart, Chateau d’Yquem, Dom Pérignon, Moët & Chandon and others
- 10% of revenue (5.6 billion)
Watches and jewelry
— TAG Heuer, Tiffany & Co., Zenith, Hublot, Bulgari and others
- 8% of revenue (4.4 billion)
Other activities
— Belmond and Cheval Blanc hotel chain, Caffè-Pasticceria Cova confectionery, Royal Van Lent Shipyard and Princess Yachts luxury yacht shipyards, French financial newspaper Les Echos and Italian bicycle manufacturer Pinarello
- loss of 174 million euros
Source: LVMH report for 2019
Everything is just beginning.
“If you compare us with Microsoft, we are a small company. But this is just the beginning, “ said 70-year-old Arnaud in the fall of 2019. Perhaps in 20 years people will stop using the iPhone, but will continue to drink Dom Pérignon, the businessman is sure.
Last year was a record year for LVMH in terms of revenue and net profit. In addition, the corporation closed the largest deal in the luxury market, buying the American jewelry manufacturer Tiffany for $ 16.2 billion. The plans for 2020 are to further strengthen leadership through the strength of the combined brands and the flexibility of management.
Of course, the coronavirus pandemic has affected the entire luxury market. In May, Bernard Arnault was named the most impoverished person in the world — he lost more than 30 billion dollars. But soon, due to the growth of LVMH shares, his fortune recovered. Bain & Co predicts (https://www.bain.com/insights/luxury-after-coronavirus/), that by the end of 2020, the luxury market will sink by 15–35%. Experts attribute the revival of the industry to China, which accounts for most of the demand for luxury goods.
COVID-19 is unlikely to confuse the Arno cards: LVMH is aimed at strategic development and market fluctuations, even if strong, are not so terrible for the company. The purchase of Tiffany only confirms this. LVMH is betting on a growing middle class. And its representatives in Asia are becoming more and more numerous every year.
A successful business model includes several elements. The first is fearless and merciless takeovers. In rare cases, only the court can save Arno from encroachments. So, in 2010, it became known that LVMH secretly bought 17.1% of the shares of Hermes (the manufacturer of Kelly and Birkin bags). LVMH was fined eight million euros. The parties came to an agreement: the securities were distributed among the shareholders of fashion houses, and Arno’s share in Hermes fell to 8.5%. The second is what Bernard Arnault has dubbed “reverse globalization,” that is, production in the West, consumption in developing countries, for “ reals, rubles, yuan and rupees.” The third is the effective interaction of the creative team and management. The businessman says that he managed to mix water and fire, creative people and talented organizers. Finally, the fourth element is attention to detail. During numerous business trips abroad, Arno likes to inspect stores, stand behind the counter and serve customers, see from the inside how the points work, how they are decorated, how consumers feel in them.
Piano player.
Bernard Arnault’s tough business acumen is combined with a great love of art. In 2014, on his initiative, the Louis Vuitton Foundation, a large museum center, was built in the Bois de Boulogne in Paris. The permanent exhibition includes various works belonging to the Arno family. The Foundation also holds regular thematic exhibitions and various multi-format events.
In 2016, the LV Foundation hosted the exhibition “ Masterpieces of New Art. Shchukin Collection”. It presented the legendary collection of the Moscow merchant Sergei Shchukin, which includes works by Picasso, Monet, Matisse, Gauguin, Malevich. The exhibition was visited by more than 1.2 million people, it became the main event of the year according to The Art Newspaper. During the meeting in the Kremlin, Russian President Vladimir Putin personally thanked Bernard Arnault for organizing the exhibition.
In the spring of 2017, Arno, his wife, professional pianist Helene Mercier, and son Frederick played Mozart’s Concerto №7 for three Pianos and orchestra at the Moscow International House of Music. Conducted by Vladimir Spivakov. Bernard’s love of art and music was instilled in him by his mother, Marie. She was a talented pianist, adored the Van Gogh Museum in Amsterdam, and preferred Dior clothing.