Bernard Arnault fetes record year for LVMH; calls reports of talks to buy Chanel “fake news”
Expect another year of rapid growth at LVMH, though long-term trends in world economy inspire considerable caution, insisted Bernard Arnault, chairman of LVMH, Thursday at the annual shareholders meeting of the world’s largest luxury conglomerate. Before an audience of over 2,000 inside the Carrousel du Louvre he called reports that LVMH executives had held talks with the owners of Chanel “fake news.”
“We had a record year, in a profitable market and extremely good results for our group, even if the conjuncture, in my view, in a structural manner is the object of worries in the mid-term,” Arnault told a packed audience inside the Carrousel du Louvre.
The LVMH boss was asked directly by FashionNetwork.com about reports that a senior LVMH executive had met the owners of Chanel, the Wertheimer family, late last year; and that his group was interested in acquiring the legendary brand. As LVMH execs sitting beside him reacted with visibly shocked and wide eyes, he gruffly responded to laugher from the audience: “Chanel is a magnificent business. But we have had no contact with them. I don’t know who told you that. But at a certain moment this becomes part of fake news. I think you know there is a lot of that around."
Arnault, whose extended family controls the giant group, noted that 2017 was the first time LVMH passed the 40 billion euro mark in turnover and the first time that net profits passed 5 billion euros; even as cash flow rose 20%, despite the acquisition of Christian Dior and baggage brand Rimowa.
“It’s the result of executional creativity,” said the gray-haired 69-year-old Arnault, whose group paid 2.109 billion euros in corporate taxes last year.
“In LVMH, we want to illustrate the excellence of France and the artisanal savoir-faire of France before the whole world. We are the biggest group in France in terms of by capitalization and possibly the group which hires the most people in France,” Arnault said proudly.
Turning to the global economy, Arnault noted: “Today, banks will pay you to borrow money from them – which is extraordinary. It’s a period of extremely easy money! And, there have been no crises in a decade. Which makes me think that when interest rates rise we will have a real correction in the world economy. That’s why we need to be prudent. Luckily for us we have no real debt.”
“I am not pessimistic in the mid term. Our principal motor still works very well. The continual augmentation of the quality of life in many countries and above all in our key markets like China,” added Arnault.
The year also saw the acquisition of several new brands in LVMH’s wines and spirits division: “a little American whiskey and a Californian wine – in an incredible site in Napa, boarded by the Hennessy Lake. You should stop there. And a Mexican tequila,” the executive told shareholders.
As for champagne, which scored “good progression" of a 4% rise in sales, he extolled the virtues of a newest Cuvee special of Dom Perignon, Cuvee P2, which he claimed was essentially sold out. “Even I find it hard to find a bottle. No, it’s true! I couldn’t find a bottle for a birthday party chez moi,” he said to incredulous laughter.
Turning to the house’s legendary luxury marques, Arnault praised the talent of “exceptional creator” Nicolas Ghesquière at Louis Vuitton; and the launch of the Jeff Koons’ Masters painting handbags. “The Mona Lisa sold out; while we also had a great new success with Supreme. That sold out in less than one week. It was extraordinarily awaited. And this year we doing the same thing w ith Rimowa (in a recently launched partnership with Supreme) and people waited for days outside the store in Rodeo Drive!” cheered Arnault.
“At Vuitton, our creative director Nicolas Ghesquière is also very proud to dress the First Lady of France. Though that has no real commercial impact, but it makes us very happy to lend her clothes, which Madame Macron wears magnificently!”
Addressing individual executives, the CEO complimented “the work of Michael (Burke, CEO of Vuitton) and daughter Delphine Arnault (executive vice president of Vuitton) with artists such as Koons.
However, he pointedly declined to reveal the turnover of 24 Sevres, the group’s much-vaunted luxury website which, given LVMH’s size, has surprisingly few products on offer. “That figure is confidential,” he sniffed.
Turning to perfumes and cosmetics, Arnault raved that Christian Dior had gained market share and had “an incredible success with Sauvage with a men’s scent – and a new haute parfum that has made a packet! Creativity is what counts in our group. We could buy lots of other brands – they offer us everything. That’s why we bought Kurkdjian. It’s a great little brand with a very talented creator and we think it can do very well.”
In jewelry, the executive extolled the ”excellent" performance of Bulgari, aided by new stores done by his favorite boutique architect Peter Marion, “which is giving formidable results." And was visibly excited about Chaumet’s recent exhibition in Beijing, calling it “one of the most venerable jewelry brands in Paris.” And showered praise on Bulgari for its “creativity and innovation in developing the thinnest watch in the world.”
Finally enthusing about art, he revealed that the Fondation Louis Vuitton’s Russian exhibition: Icons of Art. The Shchukin Collection “beat all records for a show on painting ever in France,” adding that the Fondation now plans to exhibit their own collection of Russian works from the same era.
Arnault saluted the memory of his late friend Pierre Godé, his early partner in the launch of his luxury empire. Before speaking directly to two of his senior executives.
“2017 was marked by the arrival of Dior chez nous. It has brought closer together la mode and perfume and also brought Pietro Beccari (Dior’s new CEO) to Paris to perfect his French, which is already not bad. While Sidney Toledano (Dior’s former CEO and now head of most other fashion brands in LVMH) never gets older. We have a new designer at Céline – the extraordinarily talented Hedi Slimane – and you will see this brand soar due to the particular talent of this designer. And we expect great results!” said Arnault, pointedly tightening his eyes and looking at Toledano, sat in the front row like most of his group’s CEOs.
In his 45-minute speech, Arnault, born in Lille, the northern French provincial city, seemed most proud about creating employment.
“We are very proud to be hiring artisans – that takes time, one year or often 18 months to develop teams that can make great products. All that should not be possible without teams that are inspired by an entrepreneurial spirit. That’s one reason we attract the best to work chez nous. We now have 140,000 employees. When I came into LVMH back in the beginning of the nineties it was about 20,000,” he boasted.
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