The names Louis Vuitton, Christian Dior, Givenchy, Fendi, Bvlgari, Marc Jacobs, and TAG Heuer are usually the first ones that spring to mind when you think of luxury brands.
Other names that may also come to mind are Hublot and TAG Heuer. In point of fact, we’re talking about some of the most well-known luxury brands in the whole globe here. Have you considered the possibility that they are all subsidiaries of the same main company?
LVMH Mot Hennessy — Louis Vuitton SE, more frequently referred to as LVMH, is a multinational French corporation that specializes in the production of luxury products and has its headquarters in Paris. It is maybe the largest luxury goods firm in the world, and it is headed by Bernard Arnault, who is 70 years old and serves as both the Chairman and Chief Executive of the company. It has a roster of 70 brands that are very well-known all over the globe.
A worldwide dominion that is expanding at a rapid rate
In addition to acquiring luxury fashion labels, LVMH also owns over fifty brands that are classified as belonging to the watch and jewelry industry, as well as brands that produce fragrances and cosmetics, wines and spirits, hotels, and other categories. It would seem that LVMH will continue to acquire well-known brands, in light of Arnault’s aim to grow the conglomerate into an even larger entity than it now is.
Rihanna is the first woman and the first person of color to accomplish this feat; her fashion company, Fenty, became a part of the LVMH family earlier this year, making her the first to do so. In addition to this, the French conglomerate entered into a historic relationship with the renowned pop singer and designer as they shook hands with each other. This alliance marked the conglomerate’s first new fashion house in 32 years.
Since its establishment in 1987 as the result of the merger of Louis Vuitton and Mot Hennessy, LVMH has been at the vanguard of the luxury brand business, continually reinventing what it means to be a luxury good year after year. Arnault’s leadership and the excellent business tactics he developed are often cited as major contributors to the success of the firm.
When Arnault was named Chairman and CEO of LVMH in 1989, he already had the vision to build an entirely new paradigm in the luxury goods market. This vision led to Arnault’s appointment as Chairman and CEO. Prior to this, he served as the Chairman of the Board of the prosperous construction firm that his late father had founded, Ferret-Savinel.
He continued to serve in this capacity until 1984 when he took on the responsibility of restructuring the Financière Agache holding firm. This was a significant turning point in Arnault’s professional career since not only was he able to effectively restructure the firm, but he also restored the House of Dior by Christian Dior to its former splendor. Arnault came in only in the nick of time to salvage the House of Dior brand when it was almost on the verge of collapse.
When he was asked by the President of Louis Vuitton at the time to participate in the shares of the newly founded LVMH, it was a defining moment in the trajectory of his professional life. Arnault, upon coming to the conclusion that this was an excellent chance to put into action his vision for the world of luxury goods, purchased a 43.5 percent interest in LVMH, which provided him with significant influence over the business. The next year, in 1989, he was appointed Chairman and Chief Executive Officer of LVMH, roles that he continues to retain to this day.
Arnault spent the following two decades working to acquire a broad variety of the most outstanding brands of luxury goods. Some of the names that he was able to acquire during this time include Givenchy, Fendi, Sephora, Hublot, TAG Heuer, Kenzo, Charles & Keith, and Celine, amongst others.
His decision to let each of the brands continue to function independently after the purchase was a significant contributor to the positive outcome of his plan. This meant that they did not need to give up their names or modify them in any way, and instead were able to maintain their own individual identities.
As a result of this, their consumers continued to be loyal, the quality of their goods stayed the same, and in general, they kept doing business in the same manner as previously without their customers being aware that their preferred brands were owned by the same parent company.
Failed acquisitions
The path that Arnault took to acquire companies may seem to be one of the most successful business strategies of all time, but it was not without its fair share of challenges. For example, in 2001 he tried to purchase Gucci by gradually purchasing the firm’s shares while simultaneously maintaining that LVMH had no intention of purchasing the business. However, he was unsuccessful in this endeavor. After this, the two firms engaged in a heated court struggle, which resulted in Arnault’s loss of Gucci, which was then acquired by LVMH’s archrival, Kering.
Another notable example, which is also more recent, is LVMH’s unsuccessful efforts to purchase Hermes. These attempts occurred more recently. Over the course of more than ten decades, Arnault made covert purchases of Hermes’ equities. In 2010, he revealed that he had amassed a 14.2 percent part of the firm; a significant chunk of this share was acquired via the use of derivatives.
This meant that LVMH was not required to publicly disclose its interests, although it could if they so choose. After a drawn-out and difficult court struggle, Arnault ultimately surrendered a majority of his $7.5 billion holdings in Hermes and ended up paying a settlement.
A powerful family in the world of business
In spite of all of these scandals, LVMH is still able to maintain its position as a market leader in the luxury goods industry. As was indicated before, a significant portion of the company’s success may be attributed to Arnault’s brand integration concept. As a result of seeing how beneficial such a strategy can be for a company’s bottom line, many other businesses operating in the luxury sector have begun implementing it.
Delphine Arnault is the executive vice president of Louis Vuitton, while Antoine Arnault is the CEO of the premium menswear company Berluti. Both of these positions are held by Arnault’s children. Despite the fact that there has not been any official confirmation of the matter, there have been rumors that Delphine would succeed Arnault as the CEO of LVMH. Regardless of the choice that is made, it is certain that LVMH will continue to be an innovator in the field of luxury goods for many years to come.
