LVMH's CEO Bernart Arnault | Source: Forbes

The A$248b Man Behind the Empire: The Story of LVMH

Before the powerhouse luxury conglomerate, LVMH ruled the luxury market, luxury brands were typically small, family-run businesses. Bernard Arnault, today is known as the ‘wolf in cashmere’ and has an accumulated net worth of over A$248 billion, according to Forbes – took these small businesses from humble beginnings and revolutionised the luxury market into the multinational enterprise that it is today.

Now home to around 79 distinguished Maisons across six diverse sectors, including wine and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewellery, LVMH dominates the current luxury market.

In June 1987, luxury French fashion house, Louis Vuitton and wine and spirits company Moët Hennessy came together in a A$4 billion dollar merger. Enabling Louis Vuitton to expand its already significant investments, and saving Moët Hennessy from being taken over, the two luxury businesses found a number of security and expansion benefits in the process of teaming up.

While the merger gave each company the independence to run its own business, Louis Vuitton management soon came to suspect that Möet Hennessy was attempting to take over. Following a period of disagreements and legal battles within the conglomerate, then 35-year-old Bernard Arnault was given an opportunity to acquire stock within LVMH.

Having already purchased French company Boussac and with it, luxury fashion house, Christian Dior, the property developer and financial engineer was ready to grow his portfolio and business even further. In 1990, Arnault purchased LVMH and began his incredibly successful acquisition strategy, which now amounts to over 75 companies under the one conglomerate and has made him, at 71, one of the richest men in the world.

LVMH divides its 79 brands into five groups. Highlighted below is the biggest business within each.

SOURCES: LVMH; Luca Solca, Bernstein | Frobes 2019

Following Arnault’s purchase of LVMH, the 1990s saw both ups and downs for the conglomerate. Despite successfully acquiring Givenchy, Berluti, Kenzo, Guerlain, Céline, Loewe, Marc Jacobs, Sephora, Thomas Pink and Tag Heuer, LVMH’s sales suffered due to the economic crisis in Asia. At the time, the Asian market was responsible for almost half of LVMH’s sales and the company struggled with dropping share prices before the decade’s end. However, the business peaked in 1999, when the LVMH acquired the long sought after Gucci Group and their share prices began to rise once again.

LVMH’s timeline in the early 2000s saw the conglomerate acquire even more brands, including fashion houses Emilio Pucci, Rossimoda, La Samaritaine, Fendi, DKNY, and Hermès before securing EDUN, Moynat, Bulgari, Loro Piana, Nicholas Kirkwood, J.W. Anderson, Repossi, Rimowa, Jean Patou, Dior, Fenty and Stella McCartney in 2010.

Despite the internalisation of so many luxury brands, including those in competition, the conglomerate is one of the world’s biggest business success stories. LVMH notably allows each of its brands to retains their own creative autonomy and heritage while leaning on LVMH’s centralised support functions at a corporate and financial level. Currently employing over 150,000 people around the world and reportedly making a sale of 44.7 billion euros last year, the conglomerate is only continuing to grow.

Source: Jamel for Forbes

Last year, the group acquired Tiffany & Co, and this year, Pheobe Philo, Off-White and Officine Universelle Buly 1803. Despite the pandemic, Vogue Business reported that LVMH began the latest financial year with “a return to sales growth led by demand for fashion and leather goods from Asia and US shoppers, even as its European store network remains closed.”

Having created an oligopolistic luxury fashion market structure, LVMH has undoubtedly transformed the luxury fashion world in just a few decades.

If you’re interested in reading about more luxury fashion legacies then you can check out the defining eras of Céline, the lasting impact of Azzedine Alaïa and the Haute Couture King, Cristobal Balenciaga.

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