How LVMH’s performance has impacted its chief

Bernard Arnault, the chairman and chief executive of LVMH, the world’s biggest luxury goods group once said: “As long as I’m not the richest man in the world, I won’t really be happy.” So how’s he feeling at the moment? Ron Emler investigates.

Not only is he this year’s biggest faller down the league table of the mega-rich, but he has also stoked resentment among many of his employees, plus he is facing the prospect of considerable trading difficulties in one of his biggest markets, China.

LVMH’s 15% share price plunge this year is one of the least severe in the luxury sector which has been battered by consumer resistance to high prices in the face of inflation and subdued global economic prospects.

But it has meant that Arnault has suffered a $54 billion hit to his net wealth and now sits in fifth place, worth an estimated $177 billion.

Musk

In March he was worth $231 billion, ahead of Tesla CEO Elon Musk, Amazon founder Jeff Bezos, and Meta CEO Mark Zuckerberg. He is now also below Oracle’s Larry Ellison.

And there are investor fears that LVMH’s trading difficulties could become worse before they start to pick up again.

The threat of tariff penalties remains suspended over Hennessy and the other Cognac houses while Beijing contemplates possible retaliation for EU sanctions against what it calls China’s dumping of below-cost electric vehicle and components, which is due to come into force in November.

However, commentators and diplomats fear that China could hurt the EU by imposing a wider range of penalties on European luxury goods, such as fashion, leather goods and watches.

Imports

European luxury goods – which include leather bags, perfume, jewellery, shoes, suits and other apparel – accounted for €11 billion in 2023, almost double the value of EV imports from China.

There are a host of reasons why they fit the bill for Chinese retaliation.

Bain & Co reckons that the richest 2% of customers usually account for about 40% of luxury sales so pushing up their cost in the biggest market would penalise few people but hit the producers hard, not least LVMH.

So investors are on tenterhooks, including Arnault, whose family holdings mean he controls LVMH. Meanwhile, Arnault has become a target for the French media because a memo he sent to senior staff at the luxury conglomerate earlier this year. In it he barred any contact with what he termed “unscrupulous journalists” at seven publications.

“Any breach (and this will inevitably be known) will be considered a serious infraction, with the corresponding consequences attached to it,” he threatened.

That provoked widespread media protest, including from staff at Les Echos and Le Parisien, which are owned by LVMH and thus owned effectively by Arnault.

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