Tuesday, September 28, 2021

Profile: LVMH

It is probably fair to say that LVMH has something of a reputation. A quick scan of google stories on the French company draws attention to a number of spats that the luxury goods giant has been involved in. It‘s four year dispute with Hermes has been prominent in the news recently, but this disagreement pales into insignificance when one considers the ten year legal battle between LVMH and Google over the latter‘s alleged advertising of counterfeit products that went all the way to the EU‘s highest court.

Any further news stories will no doubt relate to the latest company being eyed up LVMH for an acquisition, and the sheer quantity of its subsidiary brands is testament to the success of this strategy. Whether it be fine wine, fashion, jewelry or cosmetics, LVMH owns some of the biggest name in every department. From its oldest subsidiary, the 16th century Chateau d‘Yquem, to one of its most recent acquisitions, the purchase of a 50 per cent stake in the Italian jeweler Bulgari for a reported £3.2 billion.

The man behind the commercial machine is Bernard Arnault, chairman of both Christian Dior and LVMH, of which Dior owns more than 40 per cent in shares as well as a 59 per cent majority in terms of voting rights. The Arnault family (led by Bernard) also owns an additional 5 per cent of LVMH‘s shares, held by Groupe Arnault. Arnault‘s journey to the helm of LVMH began in a typically Machiavellian fashion as he exploited divisions between Hennessey and Louis Vuitton in the newly-formed LVMH group. In 1988, Arnault strategically bought shares with the help of Guiness to prevent Louis Vuitton achieving the ‘blocking minority‘ they sought, which would have made managing LVMH impossible.

Since then, Arnault has pursued an ambitious and at times relentless strategy of expansion, multiplying LVMH‘s value by fifteen and increasing sales by 500 per cent in the space of eleven years, making it one of the largest luxury goods companies in the world. The group‘s brand diversity allows those more stable brands to help less-established brands to grow.

Arnault and LVMH do have a soft edge, however. Arnault‘s passion for art has resulted in the group‘s patronage of numerous major exhibitions at the Grand Palais and the Pompidou Centre in Paris. LVMH also recently announced it would sponsor the LVMH Young Fashion Designer Prize, the winner of which would receive €300,000 and the mentoring of one of the most successful fashion groups in the world. And after all, LVMH is a business and a very successful one at that.


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