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LVMH's brand portfolio is a catalogue of the finest things money can buy. It is the world's premier luxury goods company, controlling more than 70 exclusive brand names including Louis Vuitton, Christian Dior, Hennessy, Givenchy, Moet & Chandon, TAG Heuer and Guerlain. These have been accumulated over the years by LVMH's chairman, Bernard Arnault, earning him the title of France's richest man, as well as arguably the world's most influential arbiter of good taste. One of Arnault's few failures was the two-year battle to add ultra-chic Gucci to his collection. LVMH eventually admitted defeat in 2000, but instead negotiated a handsome payout for its interest. In 2010, Arnault began a similar assault on domestic rival Hermes, accumulating a 22% stake in the smaller company through the financial markets. Hermes' owners were implacable in their opposition to Arnault's investment in their company, but even after a successful court case have been unable to displace him entirely as a shareholder. There have been several other, mostly smaller acquistitions since then. Among the more notable are Bulgari jewellery in 2011 and Loro Piana luxury cashmere in 2013.
Bernard Arnault proved himself as one of the world's sharpest businessmen during the 1990s, pulling off a string of daring and ambitious deals, and earning himself an immense fortune in the process. His ruthless dealmaking was checked by a series of reverses towards the end of the decade, not least the failed attempt on Gucci, and acquisitions have been less frequent since then. The group's position as the dominant force in luxury goods is unassailable, but LVMH still relies greatly on a trio of core brands for profit, mainly Vuitton, Moet & Chandon and Hennessy. The other assets certainly add lustre to the LVMH crown but few deliver a significant return.
Louis Vuitton-Moet Hennessy, better known as LVMH, now operates across five business groups: Fashion & Leather Goods, Spirits & Wine, Perfumes & Cosmetics, Watches & Jewellery and Selective Retailing.
Despite its range of fabulous names, the group's financial foundations remain firmly rooted in its biggest brand, Louis Vuitton, still its most profitable business by far, and also the world's most valuable luxury brand. Annual sales are approximately €9bn, contributing around two-thirds of the Fashion & Leather Goods division's total revenues. The brand is thought to generate as much as half of LVMH's combined profits.
Though still best-known for its leather goods, the Vuitton brand diversified widely after American designer Marc Jacobs was appointed as creative director in 1997. He led the business into a variety of other lines including ready-to-wear clothing and shoes as well as watches, jewellery and writing instruments. However, bags remain the core of the business, and Vuitton is the only label to present each new season's fashion designs with its own matching bag. It is also the only luxury brand in the world which sells only through its own retail outlets, giving the group the largest possible share of sales and profits.
The business has demonstrated strong growth since 2004, with exceptional performance in North America and Asia. Even in 2009, at the lowest depths of the recession, Vuitton delivered double-digit growth in sales. The brand is famed for its celebrity-studded often travel-themed advertising, photographed by Annie Leibovitz. Brand ambassadors have included Sean Connery, Madonna, Keith Richards, Mikhail Gorbachev, Catherine Deneuve, Angelina Jolie, Muhammad Ali and - in a 2012 Olympics special - Michael Phelps. More recent ambassadors are Alicia Vikander and Emma Stone. In 2013, Jacobs stepped down as creative director of Louis Vuitton to focus his attention on his own signature line of apparel and accessories under the Marc Jacobs label, in which LVMH has a 33% shareholding. He was succeeded as Vuitton creative director by Nicolas Ghesquiere, formerly creative director of Balenciaga. (The Marc Jacobs fragrance license is held separately by Coty).
In 2013, the group acquired 80% of Italian ultra-luxury fashion company Loro Piana, which specialises in fine cashmere apparel, for €2bn. Some of its products, made from the finest of vicuna wool, sell for tens of thousands of Euros. The founding family retain the remaining 20% of equity and will continue to manage the business.
Fendi, in which LVMH has a controlling 67% stake, is being positioned as the fashion group's #2 brand. Ready-to-wear apparel is still designed by Karl Lagerfeld - in his rare time off from his main job at Chanel - and leather goods including the famous baguette bag and footwear is under the control of Sylvia Fendi.
Sitting alongside Vuitton, Loro Piana and Fendi is an enviable collection of other brands including leather goods manufacturer Loewe, Berluti and Stefano Bi shoes, traditional British shirtmaker Thomas Pink, and fashion labels Givenchy, Kenzo, Celine and Emilio Pucci. In 2009, the group acquired an unspecified holding thought to be around 49% in ethical clothing label Edun, owned and run by the wife of U2 singer Bono. A controlling stake in luxury shoemaker Nicholas Kirkwood was also acquired in 2013.
In 2016, the group acquired luxury luggae maker Rimowa, taking an 80% stake for €640m. It is LVMH's first-ever acquisition of a German company.
Christian Lacroix, the designer launched by LVMH in the 1990s and supported for many years without ever making a profit, despite its adoring critical following, was sold during 2005. In 2016, the group also divested the ailing Donna Karan/DKNY business, originally acquired in 2002, after several years of trying to effect a turnaround. The brand was acquired by G-III at a valuation of $650m.
Towards the end of 2010, the group secretly acquired an initial holding of around 17% in smaller rival Hermes, against the wishes of that company's controlling family, who feared an attempt at a hostile takeover. Despite attempts by the family to block further acquisitions, LVMH had increased its stake to just over 22% by the end of 2011. Hermes launched legal action against LVMH and also restructured to reduce the likelihood of the larger group adding further to its stake. In 2013, LVMH was fined €8m for failing to disclose the deals with which it accumulated its initial holding, but was not barred from holding onto the shares. In Sept 2014, it accepted an effective defeat in the dispute. In a court-mediated truce, it agreed to spin off the entire stake to shareholders. Bernard Arnault's private investment vehicle ended up with a reduced stake of around 8.5% of Hermes.
The legendary Christian Dior couture business has traditionally operated separately, producing ready-to-wear and leather goods as well as watches and jewellery. Brand ambassadors include actresses Marion Cotillard and Jennifer Lawrence. The brand celebrates its 70th anniversary in 2017 with a major exhibition in Paris.
Historically, Dior was personally controlled by Bernard Arnault's private investment company through an 74% shareholding (but 85% of voting shares). Dior in turn served as the holding company for a 41% stake (but 57% of voting shares) in LVMH. Arnault holds another 6% of LVMH shares directly. In Spring 2017, Arnault took steps to simplify the group's structure by merging the Dior couture business into LVMH. He issued an offer for the 26% of Christian Dior owned by public shareholders for around €12bn, to be paid in a mixture of cash and the remaining shares he held in Hermes. The Dior fashion business was then acquired by LVMH at a valuation of €6.5bn.
The Fashion & Leather Goods division controls its own retail network of around 1,850 branded shops worldwide, including around 500 under the Louis Vuitton name. It remains the core business within LVMH, contributing more than half the whole group's operating profits and seemingly immune to recession. Divisional revenues have continued to rise steadily in recent years, apart from a temporary hiatus in 2013 as a result of restructuring and currency fluctuation. Strong recovery since then, combined with the inclusion of Dior from 2017, has led to a series of record performances.
Divisional revenues jumped by 20% in 2019 to €22.2bn, with operating income of €7.3bn. The US accounted for around 21% of sales, Japan for 12% and France for 8%.
LVMH's Spirits & Wine business - known as Moet Hennessy - controls many of the world's most celebrated luxury beverages. It is the global leader in champagne, controlling the two top-selling brands worldwide, Moet & Chandon and Veuve-Clicquot, as well as Dom Perignon, Krug, Ruinart and Mercier. It acquired Montaudon champagne in 2008, but sold it on in 2010 to rival Jacquart. Until 2002, the group also owned Pommery, sold that year to Vranken Monopole. Moet Hennessy Wines Estates is the umbrella name for a collection of New World vineyards including Domaine Chandon sparkling wine in the US, Argentina and Brazil, Newton in the US, Mount Adam and Cape Mentelle in Australia, and Cloudy Bay in New Zealand. Spanish vineyard Numanthia joined the group in 2008. In 2015, the group launched a completely new Californian wine under the name Smoke Tree. Oldest member of the wines portfolio is Chateau d'Yquem, founded 1593, which produces the world's most expensive Sauternes dessert wines, with bottles starting at £150.
LVMH's other prestige vineyards include Chateau Cheval Blanc, regarded as one of the finest wine producers in Bordeaux. That brand was extended in 2006 to the Cheval Blanc luxury hotel and spa in the French ski resort of Courchevel. Luxury hotels is one of LVMH's newest diversifications: a second Cheval Blanc resort opened in the Maldives in 2013 and further properties are in development for Egypt, Oman and Paris. Also in 2013, the group acquired Hotel Saint-Barth Isle de France on the island of Saint Barthelemy in the French West Indies.
Combined volumes for the champagne portfolio were 64.9m bottles in 2018, equivalent to almost 5.4m cases. Moet & Chandon alone accounts for around half that total. Wines added a further 38.5m bottles (3.2m cases).
The group's portfolio of distilled spirits is led by Hennessy, founded in 1765. It is the world's best-selling cognac by volumes, and overtook Smirnoff for the first time in 2016 to become the #2 spirit overall by retail value with sales of $4.3bn in 2017, according to Impact Databank. Volumes were 7.5m cases (around three times both its nearest volume rival Martell and its closest competitor by value Remy Martin). Hennessy's biggest market now is no longer the US but China. Moving out of its traditional areas of wines and cognac, the group agreed in 2002 to acquire a controlling stake in Poland's Polmos Zyrardow distillery, makers of luxury vodka brands Belvedere and Chopin, and their US distributor Millennium Brands. (That business was temporarily thrown into confusion in 2006 by the termination of the company's license to use the Belvedere trademark in the US. A new deal was renegotiated in 2007). In 2004, it won the auction for Scottish whisky business Glenmorangie with a bid of £300m. Luxury rum brand 10 Cane was introduced in the US in 2006. The group acquired majority control of Chinese white spirit Wen Jun in 2007, but sold those shares again in 2016.
The group sold 93.3m bottles of cognac in 2018 (almost 7.8m cases) and another 19.1m bottles of other spirits.
Diageo still owns a 33% stake in the Moet Hennessy drinks business, and the two companies distribute their brands in several Asian markets through a jointly controlled venture. A similar US venture, Schiefflin & Somerset, was dissolved in 2004 after Diageo took back distribution of its own brands. That company, renamed Moet Hennessy USA, continues to handle LVMH's brands in North America, as well as Grand Marnier under contract. Diageo is known to favour the chance to make a full buyout of the Moet Hennessy business if and when it can persuade Bernard Arnault to consider a sensible price. So far, there has been no indication that such a time is imminent.
The US alone contributes 22% of the Wines & Spirits division's sales, and the group has sought to bolster that with marketing strategies aimed directly at that market, though also of international appeal. Actress Scarlett Johansson was the brand ambassador for Moet & Chandon from 2009 to 2013, succeeded that year by Roger Federer. In 2009, the group also produced a special edition of Hennessy, VS 44, in honour of Barack Obama, the 44th President of the United States. France and Japan account for 7% and 6% of divisional sales respectively. However the biggest market by far is the rest of Asia, accounting for 30% of sales.
Spirits & Wine is LVMH's second most profitable division, with operating profit of €1.7bn in 2019 on record revenues of €5.6bn. Cognac & spirits accounted for just over half of revenues; wines & spirits for the remainder.
Despite their respective sizes, LVMH's three remaining operating divisions are far less profitable. Perfumes & Cosmetics generated sales of €6.8bn in 2019, and operating profit of €683m. Makeup accounted for 47% of revenues in 2018, perfume for 35% and skincare for the remainder.
Its biggest brand is Parfums Christian Dior, historically produced under license from Arnault's Christian Dior couture company. This encompasses a number of major male and female fragrances including current bestsellers J'Adore and Homme, Miss Dior, Pure Poison, Addict, Higher, Dune, Fahrenheit and Eau Sauvage, as well as a range of prestige cosmetics and skincare products under the Capture sub-brand. J'Adore has been the top-selling fragrance in France since 2010, and Dior the top-selling brand overall ahead of Chanel.
The Dior brand is supported by Guerlain, offering a similar range of fragrances (Shalimar, L'Instant, Insolence and 2012 launch La Petite Robe Noire), skincare products (Orchide Imperiale) and cosmetics. It is the #3 best-selling fragrance family in France. Givenchy, Kenzo and Loewe also lend their names to a range of perfume and cosmetics products, and the portfolio is rounded out with two trendy US brands, Benefit Cosmetics and Fresh, as well as professional French cosmetics company Make Up For Ever and a controlling stake in Italian perfume house Acqua di Parma.
Brand ambassadors include actors Charlize Theron (for Dior J'Adore), Natalie Portman (Miss Dior), Jennifer Lawrence (Joy by Dior), Monica Bellucci (for Dior cosmetics), Alicia Keys (Givenchy), Jude Law (Dior Homme fragrances), Johnny Depp (Dior Sauvage) and pop star Justin Timberlake (for Givenchy Play).
Two fledgling US cosmetics businesses bought in 2000, Hard Candy and Urban Decay, were sold at the end of 2002; Bliss, which manufactures a range of cosmetics spun off from a fashionable New York spa and health club, was sold in 2003.
Selective Retailing is LVMH's name for a collection of upscale retail brands. Chief among these is Sephora, a chain of luxury stores specialising in perfumes and cosmetics. Since its acquisition in 1997, the chain has expanded from fewer than 60 outlets in France to almost 1,900 stores in 34 countries. It became the market leader in perfume and cosmetics selective retailing in France for the first time in 2009, and also sells its own house label of Sephora cosmetics and skincare products. Sephora also has a controlling stake in Russian beauty chain Ile de Beaute.
It is supported by DFS, one of the world's leading duty-free chains. These rebranded in 2013 under the T Galleria brand. Both DFS and Sephora experienced a dramatic slide in performance from the late 1990s, especially in Asia as a result of economic turbulence followed by SARS fears. LVMH has wrestled ever since to restore both businesses to profitability with a radical cost-cutting programme, closing underperforming stores (including all Sephora outlets in Germany and Japan) and renegotiating concessions. In 2000 the group acquired (for around $300m) Miami Cruiseline Services, the world's leading provider of onboard duty-free retail shops. It now operates as Starboard Cruise Services, managing outlets for its own luxury brands as well as third-party brands on Royal Caribbean, Carnival, Costa, Silversea and Holland America ships.
Le Bon Marché is one of the most prestigious stores in Paris - and indeed claims the world's first ever department store when it opened in 1852- and also owns smaller store Franck & Fils as well as upmarket grocer La Grande Epicerie. LVMH acquired a majority stake in iconic department store La Samaritaine in 2001, but was forced to close the building in 2005 when it was judged to be a fire risk. After years of legal battle LVMH finally secured permission to redevelop the site as a Cheval Blanc hotel, with a planned completion in 2018.
In 2017, the group launched its own dedicated ecommerce site, 24Sevres.com (after the address of Le Bon Marche), selling its own leading brands as well as third-party products. It is the only site officially selling both Louis Vuitton and Christian Dior online. LVMH separately offers its spirits and some other products online via Clos19, a website in the UK, Germany and US run by Bernard Arnault's niece.
After several years of decline, revenues in the selective retailing division began to recover in 2004 and have continued to climb since then, even in the recent difficult economic environment. For 2019 , sales rose to a record €14.8bn, with operating profits of €1.4bn. The US is the group's biggest market by far, accounting for 41% of sales in 2016, followed by France (12%). Although Selective Retailing continues to be the group heading for both Sephora and the travel retail businesses for financial purposes, Sephora is overseen by the same divisional managing director as the Perfumes & Cosmetics unit.
The smallest division within LVMH currently is Watches & Jewellery, formed in 2000 to compete directly with Richemont, which has a similar portfolio. However, steps were taken in 2011 to overleap its Swiss rival with the acquisition of Bulgari, the internationally renowned Italian jewellery brand. LVMH acquired the Bulgari family's 51% stake in early 2011 and issued a tender offer for the outstanding shares with a total price tag of around €4.3bn, paid mostly in LVMH shares. That deal more than doubled the revenues of the LVMH Watches & Jewellery business.
Until then, the core of the business has been supplied by Swiss sports watch manufacturer TAG Heuer, which celebrated its 150th anniversary in 2010. The brand distanced itself from longtime ambassador Tiger Woods at the end of 2009, in favour of actor Leonardo di Caprio and racing driver Lewis Hamilton, among others. It is supported by a selection of other watch brands (Zenith, Chaumet) as well as Fred jewellery and Omas pens. As in the perfumes business, LVMH has extended its main fashion brands into the jewellery market, launching a selection of Dior and Louis Vuitton watches. The Ebel watch brand was sold in 2004, but the group acquired Swiss manufacturer Hublot in 2008. The Watches & Jewellery division was also bolstered by the creation of De Beers LV, a retailing joint venture with the famed diamond group, to sell jewellery and other luxury products under the De Beers brands. The first store opened in London in late 2002, followed by three in Tokyo during 2003. The contribution from Bulgari has caused divisional revenues to more than double since 2010, reaching €4.4bn in 2019, with operating profits of €736m.
In Nov 2019, LVMH secured a deal to acquire famed jeweller Tiffany & Co for $16.6bn. That deal will effectively double divisional revenues to around €8.5bn
LVMH also continues to operate a small press and media business under the umbrella of Groupe Les Echos (previously Desfossées International). Until 2007 this subsidiary was best-known as the publisher of La Tribune, France's #2 daily business newspaper. That year, however, Arnault began negotiations to acquire market leader Les Echos, a sister title to the UK's Financial Times, from Pearson. This led to protests from staff of Les Echos, who feared for their editorial independence, and also from those at La Tribune who feared for their jobs. Despite this opposition, the purchase of Les Echos was agreed in November 2007 for €240m. La Tribune was sold at the end of the year to media entrepreneur Alan Weill. Groupe Les Echos also produces weekly magazine Investir and owns art magazine Conaissance de Arts and a national French classical music radio station, Radio Classique. In 2015 the group also acquired daily newspaper Le Parisien / Aujourd'hui.
Bernard Arnault also manages a wide range of other investments outside LVMH through his family holding company. One of the most significant is a small shareholding in retail giant Carrefour, held through a partnership with US private equity fund Colony Capital. This partnership, known as Blue Capital, became the largest individual shareholder in Carrefour in 2008, after a decision by one of the founding families to sell some of their shares. A variety of other investments are managed through privately controlled L Capital.
LVMH performance has remained more or less undented by recent global economic problems, though growth began to slow in 2013 after three double-digit percentage increases between 2010 and 2012, including 19% in 2012. For 2013, revenues rose by only 4%, albeit to a new high of €29.01bn. Group share of net profit was virtually unchanged at €3.44bn.
There was slightly better performance in 2014, with revenues topping €30bn for the first time, up 6% at €30.64bn. Attributable net profit soared by 64% to €5.65bn as a result of the court-enforced sale of Hermes shares, which earned the group a one-off accounting gain of €2.7bn after tax. Excluding that gain, profit from recurring operations slipped 5%.
Revenues for 2015 surged 16% to €35.66bn with the assistance of beneficial exchange rates. The organic increase at constant rates was 6%. Net income was €3.57bn, down from the previous year's Hermes-enhanced figure, but up 20% on a like-for-like basis.
Performance reached a new high in 2016, despite global economic instability. Revenues surged 5% (or 6% on an organic basis) to €37.60bn, while net profit rose 11% to €4.07bn. Another peak was reached in 2017. The inclusion of Christian Dior Couture caused revenues to surge by 13% to €42.64bn. Net profit jumped over 30% to €5.37bn.
Revenues for 2018 surged by 10% to a new high of €46.83bn while net profit powered up 18% to $6.35bn. Geographically, LVMH's biggest reporting regions are Asia ex Japan (contributing 29% of sales in 2018, or €13.6bn - no exact figure is disclosed for China alone), the United States (24% or €11.2bn), Europe ex France (19%), France (10%) and Japan (7%). Asia including Japan accounts for 36% of revenues; France and Europe combined for 29%.
LVMH reported yet another record year in 2019, with revenues topping €50bn for the first time at €53.7bn while group net profit jumped to €7.2bn.
Bernard Arnault is the group's hands-on chairman & CEO, France's richest man and the global #4, with a family fortune estimated by Forbes at $74bn in 2019. Following the integration of Christian Dior, the Arnault family controls 47% of LVMH's capital (and 63% of voting rights).
In 2012 Arnault was awarded an honorary knighthood by Great Britain for services to business. However, he enraged many French at the beginning of 2013 when he transferred effective ownership of LVMH to a private foundation based in Belgium to prevent the group being broken up after his death by his five children. (France does not recognise the legality of private foundations). His two eldest children Delphine and Antoine Arnault are also directors. Delphine Arnault became deputy general manager and the effective #2 at Louis Vuitton in 2013 (she was previously deputy managing director of Christian Dior couture); she joined the executive committee of LVMH at the beginning of 2019. She also sits on the board of marketing group Havas. Antoine Arnault was appointed as chairman of cashmere firm Loro Piana in 2013, and is also CEO of the Berluti leather goods business. The Bulgari family control 2.5% of the group's equity. Alexandre Arnault, the eldest of three sons by Arnault's second wife, joined the upper echelons of the group in 2016 when he became co-CEO of newly acquired Rimowa.
Louis Vuitton learned his trade in the first half of the 19th century as an apprentice to Monsieur Marechal, who offered a service designing and packing trunks and luggage for the belle monde of Paris. Having built up a following of his own among Marechal's wealthier customers, in particular with the young Empress Eugenie, wife of Napoleon III, Vuitton established his own premises in 1854 to make personalised luggage. He was most celebrated for his popularisation of flat-sided trunks, which could be easily stacked when travelling. With Empress Eugenie's endorsement, the business quickly gained a substantial international following, and Vuitton opened its first branch in London in 1885. The designs were widely copied by other companies, so Vuitton introduced its first trademarked design pattern in 1889, followed a few years later by the LV monogram still used today. Under the control of his son Georges, Vuitton established branches in America around the turn of the century and also moved into other travel goods as well as handbags.
The family-owned business continued to be successful throughout the 20th century, but took a huge leap forward in the late 1970s after it came under the control of Henri Racamier, a successful industrialist who had married into the Vuitton family. He oversaw a rapid international expansion of the company's retail network, as well as the purchase of like-minded businesses such as Givenchy and Veuve Clicquot. Sales rose to almost $2.5bn by 1987. In that year, Racamier engineered a merger of the company with the equally upmarket drinks business Moet Hennessy, which had a similar portfolio of luxury brands.
The Moet et Cie champagne house had been founded in around 1745, and became celebrated in French court circles after it was favoured by Madame de Pompadour, the mistress of Louis XV. The house maintained its status over the turbulent years of the French Revolution, and was later a supplier to Emperor Napoleon. In 1832, management passed to Pierre-Gabriel Chandon de Briailles, who had married into the Moet family, and it was renamed Moet et Chandon. Its fame spread throughout Europe during the course of the 19th century. Later, during the 1920s, Moet et Chandon introduced what it promised would be the world's finest champagne, priced well above its existing wines, and which it named Dom Perignon after the the Benedictine monk who had first perfected the technique for double-fermenting wine to create champagne.
In the 1960s the house expanded further, acquiring rival champagnes Ruinart and Mercier. This was followed by diversification into fragrances, with the purchase of Parfums Christian Dior in 1970, and of Hennessy cognac in 1971. In 1973 the company established a winery in Napa Valley, California, under the name Domaine Chandon. Later under CEO Alain Chevalier the group also diversified into skincare with the purchase of RoC (now owned by Johnson & Johnson) and even cultivation of fine roses. However these latter businesses generated losses, and to avoid the possibility of a hostile takeover by another company, Moet Hennessy agreed to a merger of equals with fast-expanding but much smaller Louis Vuitton. However the disparity in size between the two businesses - Moet was almost two-thirds bigger than Vuitton - quickly created tensions between Moet Hennessy's Chevalier, appointed as executive chairman of the enlarged group, and Vuitton's Henri Racamier. The latter sought to bolster his position by calling upon the support of Bernard Arnault, a rising figure in the French business world, who had developed a reputation as a shrewd businessman and a tough adversary. This was to prove an unfortunate error on Racamier's part, and a stroke of immense good fortune for Arnault.
Bernard Arnault's business career had begun in the 1970s as an engineer for Ferret-Savinel, a large construction company controlled by his father. Later, he dabbled in the property development market first in France and then the US. In 1984, Arnault took control of holding company Financiere Agache, previously part-owned by his family, and used this as the platform for a series of acquisitions of weak French businesses. One of the first was Boussac, a near-bankrupt textiles group which owned various businesses including the legendary but ailing Christian Dior couture label and retail group Le Bon Marché. Arnault acquired the group and sold off everything but Dior and Bon Marché, but was frustrated to find that he could not reclaim the Parfums Dior license, which had been sold to Moet Hennessy several years earlier. In 1987, at Henri Racamier's prompting, Arnault purchased a stake in LVMH and lent his support to a campaign to oust Alain Chevalier as chairman. Almost immediately afterwards, he turned against Racamier, enlisting other shareholders to support his own campaign to force out his former partner. After an 18-month legal battle, he was successful and appointed himself as chief executive, while also transferring several of his own existing businesses into LVMH in return for a substantial shareholding. This effectively gave him complete control of the group.
During the late 1980s and early 1990s, Arnault made a series of additional significant purchases. The Givenchy fashion house joined the group in 1988, and Arnault shocked the fashion world by unceremoniously sacking elderly founder Hubert de Givenchy, replacing him with British enfant terrible John Galliano, who quickly set about reinventing the famed label. To build its haute couture profile, Arnault transferred his Christian Lacroix and Kenzo fashion labels into LVMH in 1993. Further acquisitions included jewellers Fred in 1995, designer Celine and Loewe leather goods in 1996. Having worked his magic at Givenchy, John Galliano was moved across into Dior, and replaced at Givenchy by another iconoclastic British star, Alexander McQueen. Having established a thriving portfolio of fashion brands, Arnault moved on to enhance his retail and distribution interests, acquiring Asian-Pacific DFS duty-free shops in 1996 and Sephora perfumeries a year later.
That year, however, the group's drinks business was threatened when UK giants Guinness and Grand Metropolitan announced they were merging to form Diageo. Moet Hennessy and Guinness already owned significant stakes in each other, and the French company was also involved in a series of joint venture distribution deals with Grand Met. Arnault was not only insulted that he had not been consulted over that the merger, but also nervous that he might be shut out of his distribution partnerships and unhappy about being associated with Grand Met's Burger King chain. Initially he threatened to block the merger altogether, proposing instead that the Guinness and Grand Met drinks businesses should be spun off and merged with his own Moet Hennessy division. Diageo refused, but was eventually persuaded to pay off Arnault with around £270m in compensation, as well as a seat on the Diageo board and rights to distribute the full portfolio of Diageo drinks through a new distribution joint venture. LVMH also kept its shareholding in the enlarged drinks giant, worth just under £3bn, and Diageo inherited Guinness's 34% stake in Moet Hennessy.
With this triumph under his belt, Arnault began looking for other targets. At the tail end of 1998, he resigned his directorship of Diageo, and gradually began disposing of his shares to build up an acquisition war chest. His target was revealed at the end of the year, when the company announced it had secretly bought a 5% holding in famed fashion brand Gucci. Shortly afterwards, LVMH acquired further shares from fashion house Prada as well as through the markets to build up a 34% holding in Gucci by early 1999. But what began as a seemingly friendly alliance between the two companies quickly turned sour, leading to a bitter takeover battle. Uncharacteristically, this was a battle which Arnault eventually lost. [See Gucci profile for details of the subsequent battle for control]. LVMH finally sold its shares in Gucci at the end of 2001, consoling itself with a profit of €860m.
Never a man to do just one deal when he could be doing ten, Arnault took some time out during the Gucci battle to ink a number of other mostly internet-related deals, later consolidated into private incubator fund Europ@web. By 2000, Europ@web had built up stakes in more than 50 leading online businesses. Plans to launch an IPO of the group were later cancelled, but instead Arnault successfully sold a big shareholding in Europ@web to media and utility giant Suez Lyonnaise des Eaux for around $255m in 2000, shortly before the internet bubble burst. Most of Europ@web's investments did not survive the downturn, with fashion e-tailer Boo.com its most notorious failure. One notable success was the French ISP LibertySurf, later sold to Tiscali for a huge profit. Another unsuccessful diversion was an attempt to break the stranglehold of Sothebys and Christies on the international auction market. LVMH acquired the leading British auctioneers Phillips and Bonhams & Brooks, as well as Etude Tajan of France and famed Geneva art dealership De Pury & Luxembourg, merging them to create a new international auction house, Phillips de Pury & Luxembourg. However the economic downturn of 2001 hampered the company's development, and LVMH sold its majority stake to management in 2002.
Meanwhile, LVMH continued to add a string of prestigious fashion labels to its portfolio, including UK shirtmaker Thomas Pink and Italian fashion house Fendi. The purchase of Swiss sports watchmaker TAG Heuer ( for $751m) was the first of a series of acquisitions of luxury watch and jewellery makers. Other brands bought in late 1999 and early 2000 included Ebel, Chaument and Zenith. High profile US designer Donna Karan joined the portfolio in 2001. Also that year the group announced a joint venture with De Beers to market jewellery and other luxury products under the De Beers brands, and bought out Prada's stake in Fendi, to gain majority control of the Italian design house. Although economic slowdown, exacerbated by the shockwaves from the 9/11 New York terrorist attacks, hit all of LVMH's operations later in the year, performance steadily improved in 2002 and 2003. The group streamlined its portfolio during the period, selling off several under-performing businesses. Arnault has also kept much tighter control on acquisitions, adding only a few key businesses, compared to the numerous purchases of previous years.
In 2006, LVMH issued a lawsuit against the French subsidiary of auction giant eBay for acting as an intermediary in the sale of counterfeit Christian Dior and Louis Vuitton products. In 2008, a judge found in favour of the luxury group, and ordered eBay to pay a fine of almost €40m in compensation. It also instructed eBay to block sales of certain genuine products, because their sale via the auction site breached selective distribution agreements made by LVMH. A further €1.7m fine was made against eBay in November 2009, for failing to comply with the previous ruling.
Last full revision 27th September 2018
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