Bernard Arnault’s $45 Billion Loss Won’t Derail His Plans for LVMH
The magnate has his eye on long-term investment.
Bernard Arnault may be down $45 million, but he’s not letting the pandemic deter his plans.
The famous owner of luxury conglomerate LVMH was hit hard by the coronavirus pandemic––that $45 billion figure is how much his personal net worth declined as LVMH stock plunged by 19 per cent this year. According to Bloomberg Billionaires Index, Arnault lost more money than any other individual in the world during this period and about as much as Amazon’s Jeff Bezos gained.
But Arnault has garnered a reputation as an aggressive businessman who historically does well under pressure, so it’s no surprise that he is hatching plans to ensure that LVMH comes back stronger than ever. He first shocked the luxury world with his hardball tactics (something often derisively branded as deeply American by his French compatriots) in the ’80s and has continued to use economic downturns to his advantage. Arnault took the recession in the 2000s as a means to force Prada out as shareholders of Fendi, which he had recently acquired at the time.
“You could divide the world’s top billionaires into highly successful risk managers and highly successful risk-takers; Arnault is a highly successful risk-taker,” Pauline Brown, the former chairman of LVMH Americas, told Bloomberg. “When he feels momentum and long-term potential, he uses the resources he has to go after it aggressively.”
The biggest bet will be LVMH’s acquisition of American fine jeweller Tiffany & Co. for which the company paid approx. $21 billion––the largest acquisition in luxury history and a move that briefly made Arnault the world’s richest person. LVMH has vehemently denied it has any intention to renegotiate the price or walk away from the agreement. “We are very much long-term oriented,” LVMH chief financial officer Jean-Jacques Guiony told Bloomberg. “In a crisis a lot of people say things will never be the same, but we are still confident.”
Even though tourism is among the economy’s most devastated industries, Arnault is ploughing ahead with the reopening of Paris’s Samaritaine department store as both a luxury hotel and a centre of duty-free shopping. After temporarily shutting down, construction on the $1.5 billion project has resumed. An equally extravagant Cheval Blanc hotel on Los Angeles’ Rodeo Drive is likewise in the works. The same investment-driven mindset is informing the conglomerate’s stable of heritage fashion labels, as it is actively recruiting a new head designer for Givenchy and retooling the brand in time for a September runway show.
Whether Arnault’s plans for LVMH yield much-need profits is an open question—and one that may not be answered until the Covid-19 crisis is over. In the meantime, the CEO will have to take some solace in the knowledge that LVMH is faring no worse than its competitors. Shares for chief rivals Kering and Richemont have fallen by 25 per cent and 30 per cent, respectively, since the pandemic has started.