French mogul Bernard Arnault unseated Jeff Bezos as the world’s richest man, but the path of the LVMH group owner is full of business strategy lessons.With information from Entrepreneur we share their knowledge with you.
Last year and this 2021, we have witnessed what is perhaps the fastest and closest race among the world’s billionaires. In early August, French businessman Bernard Arnault became the richest man in the world , ousting Jeff Bezos, founder of Amazon , and leaving Elon Musk, CEO of Tesla and SpaceX , in third place. Although it is not the first time that the owner of the luxury conglomerate LVMH has reached that position, it is the first time that it has remained there for more than a couple of hours or days.
The position that Arnauld occupies today, at the top of the great fortunes of the planet, is the result of 50 years making strategic movements at the business level: acquisitions, sales, mergers, investments and others. However, the catalyst that took its heritage to the top was the change in consumer paradigms after the Covid-19 pandemic .
Right now, the 72-year-old French businessman and his family have an estimated fortune of $ 200.5 billion , according to the Forbes Real-Time Billionaires Index. With this figure, just a few days ago he surpassed Jeff Bezos , who remained in the first place of the list since October 2017 and now his equity is estimated at ‘only’ 190.4 billion dollars .
Bernard Arnault, from his father’s employee to luxury industry magnate
Today, Bernard Arnault is president and CEO of LVMH , the luxury conglomerate that encompasses 75 brands from different sectors, such as fashion, perfumes, cosmetics, jewelry, watches, wines and spirits, hospitality and more. The tycoon and his family control 47% of the shares of the group, which already holds the title as the most valuable company in all of Europe .
Among the firms LVMH operates are Louis Vuitton , Moët , Christian Dior , Givenchy , Marc Jacobs, Kenzo, Sephora, Fendi and Céline. So basically, every time we buy a luxury item, we are adding to the Arnaults’ accounts .
With a degree in Business Administration from the Polytechnic University of Paris, Arnault began working in his father’s business in the early 1970s and became CEO by 1974. His first big move was to convince his father to redirect the company, selling his business in the construction industry to focus on promoting the real estate sector under the name of Férinel .
In 1984, the Frenchman acquired the trust company Financière Agache and later bought the Boussac textile company, then the owner of Christian Dior . His strategy was to relaunch the brand to make it a top brand in the world of the most exclusive fashion, as it is until today.
Taking advantage of the stock market crash of 1987, the businessman invested most of the family fortune in buying shares of LVMH, a new group in the luxury sector born from the merger of Louis Vuitton, the exclusive signing of Moet Chandon and producer of Hennessy cognac. Since then, he has played a decisive role in multiplying the value of the conglomerate at least 15 times and positioning himself as ‘the largest luxury seller in the world’.
His business work has been recognized with several awards such as the honorary titles of Grand Officer of the Legion of Honor and Commander of the Arts and Letters of France .
How did Bernard Arnault become the richest man in the world?
By the early 2000s, Arnault already owned the most prestigious fashion, perfume and jewelery brands in Europe. In 2005 he became the richest man in France , according to Forbes, and entered the ranking of the 10 richest people in the world in 2013 with a fortune of 29,000 million dollars . Just five years later, in 2018, he made it to the top 3 of the planet’s great billionaires , $ 76 billion, alternating between first, second, and third along with Bezos and Musk.
From 2019 to date, LVMH’s dominance has been extended with the acquisition of the luxury hotel company Belmond , owner of 46 hotels, trains and cruise ships.
A year earlier, in May 2018, Arnault invested in the Lyst platform, a website for gather all your luxury brands and attract young buyers. The strategy was accompanied by good influencer marketing and ultimately helped it boost its international strength.
It also added the brands Bvlgari , Stella McCartney and Tiffany & Co. The latter, completed in January 2021, is estimated to be the largest purchase in the history of luxury brands: a $ 15.8 billion transaction. Not forgetting the cosmetic company Fenty , by singer Rihanna , who just made the Forbes billionaire list
Also, the tycoon likes to invest in different industries. For example, he was among the first canny people to invest in Netflix in 1999 and in 2007 it was revealed that he owns shares in Carrefour , the largest supermarket chain in France.
Part of its wealth is a large collection of art that, according to some sources, includes works by Andy Warhol, Picasso, Henry Moore, and Yves Klein . In fact, his taste for art inspired him in 2014 to create the Louis Vuitton Foundation , an organization which sponsors contemporary artists and art exhibitions.
The luxury sector boom in the post-pandemic scenario, the key to success
In the 2021 Forbes billionaires list, Arnault is listed as the third richest person in the world with a net worth of $ 150 billion . Since the publication of that listing, LVMH’s share price has skyrocketed by around 21% , three times the increase recorded by Amazon’s holdings (7%).
Such growth, according to analysts at the German firm Berenberg, indicates that “the underlying structural drivers of long-term luxury demand have remained fully intact,” despite the Covid-19 pandemic and the economic havoc it has wreaked on the economy. world.
“In the current context of emerging from the health crisis and the recovery of the world economy, I believe that LVMH is in an excellent position to continue its growth and further strengthen its leadership in the global luxury market in 2021,” he said for his Arnault part in recent statements collected by Expansión .
The businessman has earned more than 110 million dollars in the last 14 months , since in March 2020 his assets were estimated at 86,000 million dollars. In fact, America’s billionaires increased their wealth by 45% during the first year of the pandemic.
During the first quarter of 2021 alone, the LVMH group had revenues of $ 17 billion . This is 32% more compared to the same period in 2020. In the second quarter, the company posted revenue of $ 17.4 billion , 38% from its fashion division.
In sum, the total benefit for the first half of 2021 is 53% higher than for the same period of 2020, the first stage of the pandemic. It is also 62% higher than income during the first six months of 2019, when a pandemic was not even suspected.
According to Jefferies analyst Flavio Cereda, quoted by Forbes , the key to this boost lies in buyers from China , a country that represents 35% of the global luxury market and was responsible for 90% of the sector’s growth in 2019.
In 2020, the luxury industry was affected by the health emergency, as were most of the sectors. According to the consulting firm Bain & Company, the sector experienced a fall of between 25% and 30% in the first quarter of last year.
However, some experts project double-digit luxury market growth through 2025 and, according to the Bloomberg market consensus, almost 65% of experts recommend buying LVMH shares .
“LVMH is the firm that has the highest quality of all those in the sector and that has the greatest diversification, which makes us think that it is well positioned to overcome shocks and short-term volatility, as it has historically done, and that it is better located than any of its peers to reinforce its long-term leadership in the luxury sector “ , project the analysts of the German analyst Berenberg, specialized in the field of luxury.
What’s next for Bernard Arnault and his millionaire family?
At 72, the billionaire doesn’t seem interested in retiring, but even if he does, he has paved the way for LVMH to stick around .
The magnate is the father of five children: Delphine and Antoine, the fruit of his first marriage to Anne Dewavrin, and Alexandre, Frederic and Jean, children of the Canadian pianist Hélène Mercier, his wife of almost three decades.
Delphine is CEO of the Louis Vuitton firm. Antoine is the director of the Berluti brand and is on the board of the Italian company Loro Piana, he is married to the model Natalia Vodianova and is a candidate to inherit the position from his father.
As for the three little ones, Alexandre works for the Rimowa luggage firm and has been appointed CEO with responsibility for the company’s products and communication. Frederic is CEO at Tag Heuer and Jean, the youngest, is still a student.
“I think I am not successful, but I try,” said Bernard Arnault in a recent interview.