Bernard Arnault delivers the good and the bad
For the first time in three years, the LVMH group organised a presentation of its annual results, welcoming financial analysts and journalists on January 26 in the auditorium of its headquarters on Avenue Montaigne in Paris. Bernard Arnault opened the hour-long presentation by saying he was "very happy to be here to announce, I won't say once again at the risk of boring the audience, record results for the LVMH group."
The world's first fortune detailed the double-digit growth of the world's number one luxury goods company: a turnover of more than 79.2 billion euros, up 23%, a current operating profit of 21 billion and a cash flow of more than 10 billion.
In a calm, slightly hoarse voice, the 73 year old leader valued his group's results. "In difficult macroeconomic and geopolitical times, the LVMH group has gained market shares and has progressed, this has been the case since 2019". And he emphasised "quite remarkable financial performances which are the consequence of the tremendous work of our teams in the different houses."
During his introductory monologue, or in his answers to questions from financial analysts, Bernard Arnault made a point of valuing his teams.
Announcing that his flagship brand Louis Vuitton had passed the 20 billion euro mark in sales by the end of 2022, he praised "the extraordinary performance of its leader Michael Burke, who for the past ten years has brought it to this exceptional level, while retaining its extraordinary desirability with innovations, great boutiques and creations that astonish the whole world".
He also highlighted the fact that Celine, with Hedi Slimane as creative director, had passed the 2 billion euro sales mark.
On the stage, the luxury tycoon was accompanied by Jean Jacques Guiony, the group's financial director, and Antonio Belloni, the group's deputy general manager, while many executives were present in the audience, including his children, his sons all dressed in elegant dark suits, while Delphine Arnault, recently promoted to general manager of Dior, wore a magnificent red dress, perhaps a sign of the heiress's rise in the organisation chart. Her father also said a few words about the recent changes at the head of the group's houses aiming for "strategic continuity with a different managerial approach."
"We have made some changes in the group's teams. The head of Louis Vuitton, after a tremendous success, will work with me on other matters. (...) Pietro Beccari is moving from Dior to Vuitton after a tremendous success at Dior. And Delphine, who was at Dior for twelve years, then ten years at Vuitton is now returning to Dior, with a wonderful creative team and a no less extraordinary designer."
The executive did indeed highlight the group's star designers, without dwelling on the questions around other houses. "We have a set of extraordinary designers, whether at Louis Vuitton with Nicolas Ghesquière, at Dior with Maria Grazia Chiuri, at Céline, at Loewe with Jonathan Anderson. Our ambition is to make these brands more and more desirable. Their desirability, when compared to that of competitors, is steadily improving. That's the secret, the numbers are just a consequence."
Patrice Wagner, Chris de Lapuente and Stéphane Bianchi
On January 26, Bernard Arnault praised his managers, using many flattering adjectives: "Le Bon Marché is small, but very well managed, I don't know if Mr. Wagner is here," he said, looking for the manager of the Parisian department stores. But bravo for the latest designer, with his pots and pans (the Sangam installation by Subodh Gupta, editor's note), it's really superb", he said to the head of the store. On the selective retailing side, "Chris de Lapuente is running this with a masterful hand with Sephora's success which is extraordinary" and on the watches and jewellery side "Stéphane Bianchi is running these businesses. All our watch businesses are profitable."
Bernard Arnault also made several asides to his children, rhetorically asking Alexandre (executive director of Tiffany) about the current valuation of Tiffany, or slipping in that Frédéric (CEO of Tag Heuer) "is constantly launching new watches" one of which he was wearing.
But, despite his outbursts, the group's chairman avoided all questions on the future of LVMH's governance. The succession? "You noticed, it's fashionable, the retirement age has been extended." The Agache family holding company transitioning into a limited partnership? "The lawyers recommended that I form a limited partnership. They told me that it was good, that it was fashionable. Our friends at Hermès formed a limited partnership... That's as far as it goes." The leader did not hesitate to dig at his rivals. Bernard Arnault was alert and seized every opportunity that was offered to him, and even those that were not, to make a few sharp remarks.
Digs and nods
Dressed in a navy suit, tie of the same tone and white shirt, with a Grand Officer of the Legion of Honour rosette on his lapel, the director asserted his societal views, in particular in France, and the environmental contributions of his group. He also recalled his reticence towards the sirens of e-commerce. "What is interesting about selling on the internet is the service. When you come to Sephora to test a lipstick or a cream, afterwards you buy it on the Sephora website. But discovering the product on Amazon in the middle of other utilitarian products, it not something to dream about... and most selective brands are not represented there." As for the second hand market, Bernard Arnault prefers to "concentrate on the first hand".
He also addressed some direct criticism to his competitors, deploring certain alleged practices on the Chinese market. "We have a number of competitors who need turnover and who do not hesitate to go through resellers who buy their products to resell at discounted prices in China," he explained. "We avoid these parallel exports. We have also seen sales of products through duty free shops that were making huge turnovers when there was no one at the airports. Why was this? Because the products never arrived at the stand and went straight from the stores to be sold at a discount in China. It's terrible for the image!"
In conclusion, the LVMH chairman explained: "I am quite confident for 2023, if the opening of China is confirmed. The start is extremely strong. If this continues, it should be a very good year and we will be able to develop our investments and take market shares. Even when the situation gets difficult, we continue to invest, whereas some competitors may have slightly tighter financial constraints... but they end up investing less and things get more difficult for them afterwards. For us, this has worked rather well to get through this health crisis period."
Jean Jacques Guiony highlighted the heavy marketing investments made in the last quarter of the year, 30% higher than those made in 2021, with the Yayoi Kusama operations at Louis Vuitton or the fashion show in front of the Giza pyramids, in Egypt, for Dior.
For once, the leader also addressed a competitor, with whom he is collaborating via Tiffany&Co, with flattering words. Bernard Arnault was also very positive about the Swiss watch brand Patek Philippe... enough to fuel a rumour in the muffled world of luxury watchmaking that LVMH is planning to acquire the Geneva-based company.
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