Arnault Pits Son Versus Daughter in LVMH Succession Test

Arnault Pits Son Versus Daughter in LVMH Succession Test

Two years ago, Bernard Arnault asked his son Antoine to run shoemaker Berluti, then this month he installed his daughter, Delphine, as executive vice president of Louis Vuitton. While her brief is to revive the handbag maker and Antoine’s task is to transform Berluti into a menswear titan, Arnault is auditioning both for another job: his own. At 64, the chief executive officer of LVMH Moet Hennessy Louis Vuitton SA (MC), already qualifies for his state pension. He hasn’t signaled he’s tiring of running the world’s largest luxury-goods company, but “at some point there is an element of succession that needs to take place,” said Berenberg analyst John Guy. Giving his children greater responsibility allows Arnault to test them, Guy said.Arnault knows a thing or two about fomenting rivalries. He was invited into LVMH in the 1980s by Henry Racamier, an heir to Vuitton, who was feuding with another faction in the company. Arnault helped Racamier see off his chief rival, then ousted Racamier and took over the bag maker.

This time, France’s wealthiest man — who has built LVMH into a luxury behemoth offering more than 60 brands from Krug champagne to Tag Heuer watches — is pitting members of his own family against one another. Arnault, who controls 46.5 percent of the voting rights in LVMH, has said he expects a relative to replace him.

Huge Endorsement

The billionaire turned down an interview request via a spokesman. LVMH shares have climbed 5.2 percent this year, trailing the Bloomberg European Fashion Index’s 14 percent gain.

Delphine, 38, is shaping up as the more likely successor of the two, according to Luca Solca, an analyst at Exane BNP Paribas. While Berluti is important, it’s less so than Vuitton, which accounts for more than half of LVMH’s 5.9 billion euros of profit, Solca said.

Her appointment at the handbag maker, which stages its women’s fashion show this week, is “a huge endorsement” for the top job, the analyst said.

Others are betting on Antoine. Delphine’s job at Vuitton has more to do with signaling to investors Arnault’s commitment to reviving the fading brand, according to Mario Ortelli, an analyst at Sanford C. Bernstein. Antoine, 36, is more likely to replace his father because he has better people management skills, the analyst said.

Extrovert, Introvert

“Antoine is more extrovert. Delphine is more introvert,” Ortelli said. “Delphine can have a very important role but more in the way of a shareholder or chairman, not a manager. Antoine can be the face of the group.”

Delphine and Antoine differ as much as the tasks their father has asked them to do, according to people who have worked with them. The siblings declined to be interviewed for this story.

Delphine Arnault, who studied at Edhec Business School in France and at the London School of Economics, is reserved, shrewd and fashion-savvy, according to three people who asked not be identified out of concern for their working relationship with her. She joined her father’s company in 2000 after a stint at McKinsey & Co. and was named to LVMH’s board in 2003.

Until June, Delphine worked as deputy managing director of Christian Dior Couture. In her five years in the post, the label’s sales climbed 67 percent to 1.28 billion euros, more than double the total industry growth rate, according to consultant Bain & Co.

Exclusive Dior

At Vuitton she’s overseeing all product-related activities as sales slow from Barcelona to Beijing. Delphine’s experience at the more-exclusive Dior brand will help move Vuitton upscale, Vuitton CEO Michael Burke said in a statement when she was appointed.

LVMH, which doesn’t break out revenue by brand, in April posted its weakest fashion and leather-goods sales growth since 2009. Vuitton revenue reached about 7.3 billion euros in 2012, accounting for more than 70 percent of sales at the fashion and leather goods division, HSBC estimates.

Antoine Arnault is more gregarious. An accomplished poker player — his winnings exceed $600,000, according to — he appears regularly in the media, from Paris Match to The New York Times’s style magazine. And he dates model Natalia Vodianova, the face of Guerlain perfume and Etam lingerie.

Mikhail Gorbachev

Antoine, who joined LVMH in 2002 after studying at Insead and HEC Montreal, knows how to connect and empathize with people, according to Concetta Lanciaux, a former director of human resources at LVMH who mentored him while she worked as an aide to his father. She now runs her own advisory firm.

“He has a real talent for image and communication,” Lanciaux said of Antoine, who became Vuitton’s director of communications in 2006, the same year he was named to LVMH’s board. His print ad campaign for Vuitton featuring Mikhail Gorbachev, Catherine Deneuve, Steffi Graff and Andre Agassi, won a Cannes Lion advertising award in 2008.

Since becoming chairman of Berluti, Antoine has hired a high-profile designer and acquired a Parisian tailor in a bid to make the shoemaker a menswear rival to Ermenegildo Zegna SpA and Brioni. He’s also spent heavily on marketing and opened stores from Miami to Shanghai.

Arnault in January said he expects his eldest son to lift Berluti revenue to “several hundred million euros,” though he set no deadline. The brand, which is unprofitable, had sales of about 90 million euros in 2012, Berenberg estimates.

Five Children

Antoine played an important role in LVMH’s 2 billion-euro acquisition of cashmere clothier Loro Piana SpA in July, according to a person familiar with the situation. He may soon start helping to manage the Italian company, the person said.

With three younger children, a nephew and a niece, Bernard Arnault has other potential successors, as well as non-family executives inside and outside LVMH.

“At least one of them will show themselves capable of taking over,” Arnault said of his kin in a documentary aired in February on France 5 television.

Antoine, at least, hasn’t excluded succeeding his father. “Perhaps. Who knows?” he told Bloomberg Pursuits magazine in 2012. “But not in the near future.”

To contact the reporter on this story: Andrew Roberts in Paris at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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