Who Is Bernard Arnault?

As Chair and CEO of LVMH (Moët Hennessy Louis Vuitton SA), a luxury goods holding company, Bernard Arnault (born 1949) controls approximately 50% of a massive conglomerate that owns over 70 of the top luxury brands in the world, including Christian Dior, Louis Vuitton, Dom Perignon, Moët et Chandon, Hennessy, Sephora, and TAG Heuer.

Arnault had an unusual professional start for a CEO in the fashion industry: he began as an engineer and property developer in his family’s civil engineering company in the industrial north of France. By 1984, he had ambitions far beyond construction—and he began to make a series of bold and ruthless moves to take over an enterprise that he could scale at the global level. Toward that end, he bought Boussac, a famous (but bankrupt) French conglomerate, so that he could take over one of the businesses under its umbrella: The House of Dior, a prize he had coveted for years. After selling off most of the other assets, he reinvested the cash into his next luxury targets: Moët Hennessy and Louis Vuitton, two iconic French companies that merged into LVMH in 1987.

Arnault’s next move was a power play that made him infamous throughout Europe. Once in the door at LVMH, he used the constant feuding between the two CEOs to secure a controlling interest and then ousted the two warring CEOs. After winning “one of the fiercest battles in French fashion,” he became Chair, CEO, and majority shareholder of LVMH—a position he continues to hold as of April 2022. Over the next three decades, he combined the defunct Boussac assets (including Dior) with the LVMH brands and dozens of acquired companies to create the world’s most powerful luxury conglomerate—with revenues of €44.6 billion ($51 billion) by 2020.

Key Takeaways

  • As a young man navigating the U.S. market, Arnault developed ambitions far beyond his family's construction and real estate business—and he began looking for an enterprise he could scale, ideally “a business with French roots and international reach.”
  • Arnault acquired Boussac, a famous (but floundering) textile and retail empire with several struggling businesses under its umbrella—including a prize that he had coveted for years: The House of Dior.
  • The highly effective—but ruthless—methods he used to turn around Boussac, which had collapsed in the largest bankruptcy in postwar French history, made Arnault known as "a force to reckon with in French business."
  • The exclusivity of a luxury brand is so central to his strategy that canceling licensing deals that he sees as damaging to the brand has been part of his playbook since he took over Dior.
  • Since early in his career, Arnault has attracted both an avid fan base and a vocal circle of critics. To his admirers, he is a visionary entrepreneur invigorating French business. To his critics, he is “the wolf in cashmere.”

LVMH: Highly Resilient Performance

Throughout Arnault’s 30-year tenure, LVMH's performance has been remarkably resilient through major market downturns. After the 2020 global pandemic caused unprecedented disruption to the luxury retail industry, LVMH recorded revenue of €64.2 billion in 2021 (an increase of 44% over 2020 and 20% over 2019) and organic revenue growth of 36% vs. 2020 and 14% vs. 2019. Even a newly acquired asset, Tiffany, had “remarkable” performance despite the flagship store on Fifth Avenue in New York City being closed for renovation.

Education and Early Career (1971 to 1984)

Bernard Arnault was born in 1949 in Roubaix, an industrial city in the north of France, where his father, a prominent manufacturer, owned a civil engineering and property company, Ferret-Savinel. Arnault’s mother, who had a “fascination for Dior,” made certain that her son was classically trained on the piano. Years later, Arnault made Christian Dior, the jewel of haute couture that had fascinated his mother, the cornerstone of his global luxury group.

In 1971, Arnault earned an undergraduate degree from École Polytechnique, the most selective engineering school in France, and joined his father’s business as Chief Construction Officer.

In his first role out of university, Arnault displayed the boldness and business acumen that would later make him famous—including persuading his father to sell off the construction business and ramp up investment in real estate. By 1976—“years ahead of the competition"—Arnault was leading the move into a highly profitable, brand-new sector in real estate: building time-share properties. Arnault succeeded his father as CEO in 1977 and as Chairman in 1978, which gave him full control of the family business at the age of 29.

In 1981, when the French socialist party with tax-the-rich policies came to power, Arnault moved his family to the U.S., where he spent three years growing Ferret-Savinel’s property business. As he navigated the competitive U.S. market, he developed ambitions far beyond construction and real estate—and he began looking for an enterprise he could scale, ideally “a business with French roots and international reach.”

Visionary Entrepreneur or Wolf in Cashmere?

When Arnault returned to France in 1984, he took the first steps in his legendary rise to control of the world's largest luxury group. During these early years, he also began to attract both an avid fan base and a vocal circle of critics. To his admirers, he was a visionary entrepreneur invigorating French business. To his critics, he was “the wolf in cashmere,” who brought an “Anglo-Saxon ruthlessness to the genteel world of 1980s French business”—no more than “a corporate raider dismantling centuries of tradition.”

The House of Dior

Arnault made his first move in 1984, when the French government was offering subsidies to any business that could rescue Boussac, a famous (but floundering) textile and retail empire with several struggling businesses under its umbrella—including a world-famous prize that Arnault had coveted for years: The House of Dior.

With $15 million of family money and $65 million in financing from investment firm Lazard Fréres, Arnault formed a holding company (Agache Financiere) and acquired the bankrupt Boussac—for no other reason than to get Dior. The highly effective—but ruthless—methods he used to turn around Boussac made Arnault known as “a force to reckon with in French business.”

For example, in order to focus on the two core assets that he knew he could scale—his haute couture prize and Bon Marché department store—he proceeded to make the company solvent by selling off most of the other businesses and firing 9,000 workers. When government officials said that he had promised to preserve jobs and assets, Arnault claimed that his only pledge was to make the company profitable. These mass layoffs earned him the nickname “Terminator”—but admirers congratulated him for “leapfrogging from his family's $15 million-a-year business to a company 20 times as large."

The Cachet of a Luxury Brand

Although the couture division of Christian Dior was an unprofitable operation by the time Arnault took over, he considered the fashion house “a fundamental element of the Dior brand cachet.” Instead of divesting, he formed Christian Dior S.A. as the holding company for the couture division and began to reinvigorate the brand with young hires that surprised the industry. After recruiting the company’s first non-Frenchman, Italian designer Gianfranco Ferré, to succeed artistic director Marc Bohan, Arnault "ruffled some French feathers" again in 1996 by appointing "brash" British designer John Galliano to succeed Ferré as Dior's head. To his critics, Arnault said that “talent has no nationality.”

To protect the brand image of “quality and exclusivity over quantity and accessibility”—another element that Arnault considered essential to the Dior cachet—he worked with his new team to cut the number of Dior licensees and franchised boutiques by half: “from 280 in 1989 to less than 150 by 1992.”

After securing the House of Dior as the cornerstone of his future empire, Arnault launched a strategic acquisition program to take over exclusive brands that met his criteria for “only the best,” including the houses of Christian Lacroix, a French fashion designer, and Celine, a leather-goods designer, as well as Dior fragrance and Givenchy fashion and fragrance. As he had done at Dior, he canceled licensing deals that he saw as damaging the brand—a strategy that became part of the Arnault playbook on dozens of luxury acquisitions over the next 30 years.

The Takeover of LVMH

In 1987, with $500 million in cash from divesting Boussac businesses, Arnault began investing in his next luxury target: Moët Hennessy and Louis Vuitton, two iconic French companies that had merged into LVMH that year.

What Arnault did next is often cited as his most notorious—and successful—power play.

Arnault had initially invested in LVMH at the invitation of the CEO of Louis Vuitton, Henry Racamier, who wanted his backing to consolidate his position against Alain Chevalier, the CEO of the much larger Moët Hennessy. Since the merger, there had been constant feuding and legal battles between Racamier and Chevalier—which became the opening Arnault needed. By the time Racamier realized that his ally had his own ambitions, Arnault had enlisted Lazard Frères, the U.K. liquor giant Guinness, and both the Moët Chandon and the Hennessy families to help him secure a 45% controlling interest in LVMH.

After Chevalier stepped down, an 18-month court battle between the two remaining contenders ended in 1989, when the courts decided in Arnault’s favor—and he emerged victorious from “one of the fiercest battles in French fashion.”

Once Arnault had ousted Racamier, he purged all the senior Vuitton executives—and then started to assemble his fragmented LVMH conglomerate into what he called a “luxury-goods supermarket." In the 1990s, as he “went on a shopping spree” to acquire brands across the luxury spectrum—from fashion, watches (TAG Heuer), and cosmetics (Sephora) to wine and spirits—he also expanded LVMH’s presence beyond Europe and North America to Asia, South America, and Australia.

The Arnault Model: Balancing Financial Discipline and Creativity

Over the next three decades, as he brought the best luxury brands in fashion, cosmetics, and beverages under the LVMH umbrella, Arnault proceeded to make “a series of brilliant business decisions” that “can only be called masterful.” Even his critics were impressed by “his ability to manage creativity for the sake of profit and growth.” Industry observers frequently credit his outstanding success in a highly competitive industry to the fact that—unlike other global CEOs—Arnault understands both the creative and the financial aspects of running a luxury business.

The Creation of Star Brands

In a 2001 Harvard Business Review interview, Arnault explained his famous business process, which—unlike the traditional fashion industry—requires financial discipline as well as creativity. The entire focus of Arnault's teams is the creation of “star brands” that must meet a high bar for four artistic and financial criteria: LVMH brands must be “timeless, modern, fast-growing, and highly profitable.” In practice, “profitable creativity” means that “star brands are born only when a company manages to make products that ‘speak to the ages’ but feel ‘intensely modern’ and ‘sell fast and furiously, all while raking in profits.’”

Although the LVMH process begins with "radical innovation—an unpredictable, messy, highly emotional activity” on the creative end, as soon as “it comes to getting creativity onto shelves—chaos is banished,” and the company imposes "strict discipline on manufacturing processes, meticulously planning all 1,000 tasks in the construction of one purse.”

The genius of Arnault’s process is that, although the "front end of a star brand—the innovation…the creative process, the advertising—is very, very expensive,” the “back end of the process in the atelier (the factory)” is a place of "amazing discipline and rigor” that drives “high profitability behind the scenes.” Brands with “unbelievably high quality” require “unbelievably high productivity,” so “every single motion, every step of every process is carefully planned with the most modern and complete engineering technology.”

For example, when Arnault automated production at Vuitton, he drove that venerable old brand to the top spot on Fashionista’s list of the world's best-selling luxury brands in 2011, with a value of $24.3 billion—more than twice the amount of its nearest competitor.

As he spent “lavishly” on advertising, Arnault "rigorously" controlled costs by leveraging every possible synergy across the group: Kenzo manufactured a Christian Lacroix line; Givenchy manufactured a Kenzo perfume, and Guerlain created the first Vuitton perfume.

Creative Talent Management

As Arnault built LVMH into the world's largest luxury conglomerate, he hired new design talent for star brands that “speak to the ages” but “feel intensely modern”: from Céline, Kenzo, Guerlain, and Givenchy to Loewe, Thomas Pink, Fendi, and DKNY.

Because his model requires that “the counterbalance to creativity must be commerce,” Arnault “never hesitated to reign in, or outright terminate, creative executives who did not produce.” Since the early days at Dior, he has often replaced creative executives with non-traditional talent and then shuffled them across his brands to help him identify opportunities to drive profit—no matter how unpopular.

For example, at Givenchy in 1995, Arnault brought in a “fashion industry darling” and “notorious wild child,” British designer John Galliano, to replace Hubert de Givenchy, the industry icon “credited with defining simple elegance for an entire generation of women, (including) Audrey Hepburn, Jacqueline Kennedy, and the Duchess of Windsor.”

Within a year, Arnault moved Galliano, the first British designer in French haute couture, from Givenchy to Christian Dior to replace Gianfranco Ferré, the Italian couturier who had led Dior design since the late 1980s. Other non-traditional Arnault hires included installing 27-year-old Alexander McQueen (another British designer) at Givenchy and Marc Jacobs at Louis Vuitton, where he gave the American designer a mandate to challenge LVMH’s competitors, Prada and Gucci.

Although those iconoclastic designers later left LVMH, they had served Arnault’s purpose: interest in his traditional fashion houses had been jumpstarted by the early 21st century.

The World’s Most Valuable Luxury Brands

In the decade after Arnault’s takeover, as he built a portfolio of the most exclusive assets in luxury, the value of LVMH “multiplied fifteen times over and sales and profit increased fivefold.”

Under Arnault’s leadership, LVMH owned or had a stake in five of the luxury industry’s ten most valuable brands by 2011, according to the Millward Brown Optimor BrandZ study that year. LVMH’s profit engine, Louis Vuitton, took the top spot as the world’s most valuable luxury brand for the sixth consecutive year, with a brand valuation of $24.3 billion—"as much as the combined values of Hermes, Gucci, and Chanel, which ranked second, third and fourth.” Across industries, Louis Vuitton ranked 26 among 100 companies in 13 industries—a list that had Apple in the number one position.

The leader of the study noted that LVMH had labels with “very high standards in terms of craftsmanship," which can give "the impression of very high exclusivity, even in some cases where it may not be so exclusive.”

The Most Acquisitive Deal Maker in Luxury: Tiffany & Company (2020)

After snapping up prizes like the German luggage brand Rimowa in 2016 and the luxury travel group Belmond (the owner of the Cipriani Venice hotel) in 2018, Arnault cemented his reputation as “the most acquisitive deal maker in the luxury business” in 2019, when he announced the biggest deal in the history of the luxury sector: the $16.2-billion acquisition of U.S. jeweler Tiffany & Company.

When the 2020 global pandemic hit the luxury market shortly after the announcement, months of public mudslinging and accusations of mismanagement ensued—but Arnault finally closed the deal at $420 million less than the original price.

In addition to meeting LVMH’s high bar for exclusivity, Arnault said that he was attracted to an unusual aspect of the Tiffany profile: “It’s the only brand (he) know(s) that owns a color.”

The Secret of Arnault’s Success

In 2019, the Financial Times described the famously competitive Arnault as having “a compulsion to possess beautiful brands and transform their creativity into profits.” Within four decades, he built LVMH "from a near-bankrupt French textile company to a global group with €46.8 billion in sales (2018)” and a portfolio of over 70 of the most desirable luxury brands in the world, including Louis Vuitton, Dior, Givenchy, Veuve Clicquot, and Dom Pérignon.

In 2020, a New York Times article about the Tiffany acquisition—and Arnault’s legendary ability to come out ahead in every deal—quoted a luxury executive, who said, “His approach is not unusual in the M&A game—it’s just unusual in this industry. He acquires brands the Wall Street way, but then he holds them. He thinks in generational terms. He’s not a gambler; he’s a strategist.” An academic in Paris said that “he’s not afraid of engaging in a fight, but…he’s constantly evaluating the outcomes, and can put ego to the side in the service of the result”—and for that reason, “even when he loses, he wins.”

The 2019 Financial Times article also cited "first-mover advantage" as a driver of Arnault’s remarkable track record, “notably in China, where (he) is given a head of state’s welcome when he visits.” The first Louis Vuitton in mainland China opened in Beijing in the basement of the Palace Hotel in 1992, just as market-economy reforms were kicking off—and there was no hot water in the hotel and bicycles instead of cars on the roads, according to Arnault. As China began to drive luxury spending over the next two decades, Arnault’s bet on the infant Chinese market paid off—with LVMH as “one of the main beneficiaries.” Arnault anticipates that improved living standards will continue to open up new luxury markets in emerging economies around the globe.

Patron of the Arts

A leading art collector and patron of the arts, Arnault’s private collection ranges from Monet to Yves Klein, Chris Burden, Takashi Murakami, Doug Aitken, Matthew Barney, and Richard Serra.

In addition to leveraging LVMH as a vehicle to support arts organizations and individual artists, Arnault has leveraged artists to attract young consumers to LVMH brands. For example, he hired Richard Prince and Takashi Murakami to make Louis Vuitton handbags and Jeff Koons to design a special edition package for Dom Perignon. In 2019, LVMH partnered with pop star Rihanna to create a new fashion house, named Fenty, in Paris.

In Paris, where “all roads lead to Arnault,” Arnault secured a permanent position in the art world in 2006 by unveiling plans for an LVMH-funded, glass-covered complex designed by architect Frank Gehry, who also designed the Guggenheim Museum in Bilbao. In addition to a permanent collection donated from Arnault’s and LVMH’s art collections, the $127-million building will house the Louis Vuitton Foundation for Creation, a cultural institution with a mission “to underline French creativity in the world.”

What Does Arnault Say to Critics?

In 1989, when Arnault emerged victorious from his highly contentious takeover of LMVH, he was asked about his reputation as the wolf in cashmere. He replied that his rival “was an excellent manager, but there is one big difference” that sets them apart: “I make sure I am the controlling shareholder of the businesses I am in.”

Has Arnault Ever Lost a Deal?

Arnault has lost a few deals—most famously, Gucci in 2001 and Hermès in 2014.

  • Gucci: After a decade of successful conquests, Arnault lost the “handbag war” in 2001, when his French rival, François Pinault, took control of Gucci, the Italian fashion house that LVMH had been pursuing. Although Arnault has denied any resentment over this unusual defeat, when the Pinault family donated €100 million to rebuild Notre Dame Cathedral after the 2019 fire, the Arnault family donated €200 million.
  • Hermès: Over the next ten years, Arnault continued to buy up brands like Bulgari (2011) and Loro Piana (2013)—and then tried to go after Hermès, an extremely successful Parisian leather house run by the sixth generation of the founding family, who are “fiercely protective” of maintaining control. When the Dumas family realized that Arnault had used “a stealth tactic common among hedge funds—cash-settled equity swaps”—to acquire 17% of the company, they fought him off in a battle that ended in 2014, when a French court ruled that LVMH had to sell down its stake.

How Much of Dior Does Arnault Own?

Arnault has owned 100% of Dior since 2017, when he paid €12 billion for the 25.9% of Christian Dior SE his family didn’t already own—and then LVMH acquired all of Christian Dior Couture for €6 billion in an internal transaction. Until 2017, he had controlled Christian Dior Couture through a “complex web of ownership” that involved the Arnault family owning 74.1% of the fashion house, with Arnault as the controlling shareholder and LVMH’s other shareholders with no direct exposure to Dior’s rapid growth. His 2017 acquisition simplified the business structure and gave LVMH’s minority shareholders full exposure to Dior.

What Made Arnault Focus on Luxury Brands?

Arnaud often cites an early visit to the U.S. as the first time he understood the true power of a luxury brand. When he asked a New York City taxi driver what he knew of France, the man replied that, although he could not name the president, he knew Dior.

What Is Arnault’s Net Worth?

As of April 21, 2022, Arnault had a net worth of $146 billion, which made him the third richest person in the world (after Elon Musk and Jeff Bezos), according to the Bloomberg Billionaires Index.

The Bottom Line

Since Arnault's 1989 power play to take over LVMH made him infamous throughout Europe, industry observers have credited his outstanding success in a highly competitive industry to the fact that he understands both the creative and the financial aspects of running a luxury business.

On the creative end, as Arnault built LVMH into a luxury empire, he has proven himself an expert at hiring design talent for star brands that “speak to the ages” but “feel intensely modern.” However, because his model requires that “the counterbalance to creativity must be commerce,” he never hesitated to reign in, or outright terminate, creative executives who did not produce. An industry insider explained Arnault’s tactics as an approach that is "not unusual in the M&A game—it’s just unusual in this industry—he acquires brands the Wall Street way."

This unusual balance of financial and creative skills enabled Arnault to combine the assets of a bankrupt company with LVMH and numerous acquired brands to create the world’s most powerful luxury conglomerate—with revenues of €44.6 billion ($51 billion) by 2020.

Article Sources
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