- Founder of LVMH, Bernard Arnault has lost close to $30 billion amid the ongoing pandemic while Jeff Bezos gained the same during the time.
Undeterred, Arnault heads every day to his war room, where he strives to keep a potential acquisition and a few pharaonic real estate projects on track, while keeping video calls with deputies as they plan to reopen factories and boutiques in a virus-shaken world.
“He is likely to keep taking share until the market returns to growth,” says Mario Ortelli, founding partner of luxury consultancy Ortelli & Co. in London.
Arnault has fascinated – and at times scandalized – the rarefied world of French business with his prodigious talent since the late 1980s to turn the innovation and craftsmanship of Europe’s oldest brands into a windfall of ever-increasing profits. Analysts expect his flagship brand Louis Vuitton to have a profit margin as high as 45 percent.
The mark-ups on the monogrammed trunks and handbags of that brand, as well as the earnings from other golden-goose items such as Hennessy cognac and Dom Perignon champagne, have helped drive Arnault’s growing presence in most things rich people spend money on: whether they buy a Fendi handbag, a Bulgari watch, or stay at the Cipriani Hotel in Venice, they add to the coffers of Arnault.
But as the outbreak and shutdown of coronavirus steps to contain it plunge the global economy into its worst crisis since World War II, becoming the number one beneficiary of discretionary spending suddenly don’t look so sweet.
Most of Arnault ‘s luxury boutiques around the world have been shutting down for more than a month, taking his most lucrative division to billions in missed sales. With parties and concerts canceled and nightclubs and restaurants closed, the maker of a fifth of the world’s Champagne is selling far less. To the masked people of the world, J’adore Dior perfume is less of a concern.
Amidst all that, Arnault is on the hook to pay Tiffany & Co. $16 billion in what has been described as the largest purchase ever made by the luxury industry. LVMH has pushed back on the suggestion that it will walk away from the transaction or renegotiate the price after similarly stagnant sales for the U.S. jeweler.
