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Bernard Arnault: Companies
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Bernard Arnault is poised to show Versace and Bulgari a thing or two about running a fashion hotel. This December, LVMH's fearless leader will open Le Cheval Blanc in the haute ski resort of Courchevel 1850 (the town's name is a nod to its altitude in meters, not its founding date). As you might expect, Arnault's 34-suite spot will act as a showcase for a range of his brands, with onsite Dior and Vuitton boutiques for last-minute ski (and après) supplies, plus a Givenchy-branded spa. But don't settle for an ordinary room: Add your name to the waiting list for the Arnault family's private apartment, which will be rented out to boldfaced guests whenever the billionaire's off buying more companies.
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Arnault grew up in Roubaix, northern France. After graduating from the École Polytechnique, France's esteemed engineering school, Arnault worked as an engineer and ran his family's construction and property business firm, Ferret-Savinel. Years ahead of the competition, he spearheaded the company's move into the lucrative new niche of building time shares on the Riviera. However, when the French Socialists rose to power in 1981, Arnault immigrated to the United States with his wife and two young children. He prospered, developing condominiums in Palm Beach, Florida, but after three years turned to developing a U.S. branch of his family's property business. His time in America left an indelible impression.
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Unique among the world's leading CEOs, Arnault had the ability to relate to both the creative and financial aspects of running a business. Although he did not believe in limiting his artists' innovation, he insisted on financial discipline when producing, marketing, and selling his company's products. He understood that, in a successful corporate culture, the counterbalance to creativity must be commerce. He never hesitated to reign in, or outright terminate, creative executives who did not produce. In 1995 Arnault fired the heads of Dior perfumes and a top manager at Givenchy, replacing them with executives from U.S. consumer brands from outside the fashion industry. The new executives, with Arnault's blessings, made unpopular but profitable changes, including eliminating the cellophane inside the Givenchy perfume box, arguing that the cost outweighed any added cachet.
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With the LVMH victory Arnault began assembling the pieces of his "luxury-goods supermarket," following a business model that balanced sound practices and creativity. He believed that to raise creative energy, a company must have managers with a certain love for and understanding of artists. In an interview with Suzy Wetlaufer for Harvard Business Review (October 2001), Arnault said, "If you deeply appreciate and love what creative people do and how they think, which is usually in unpredictable and irrational ways, then you can start to understand them. And finally, you can see inside their minds and DNA." Putting his model into action, at Dior, Arnault hired John Galliano, an up-and-coming designer with a flair for melodrama and unusual creations, including dresses fashioned out of newspapers. The move represented a new direction for the haute couture company.
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Paris, France, June 30, 1999 - Group Arnault, the private holding company of French businessman Bernard Arnault, which controls the luxury group LVMH Moët Hennessy Louis Vuitton, today established a company to pursue Internet investment opportunities in the European marketplace. The new company will be capitalised initially with e500 million.
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BERNARD ARNAULT announced last night that LVMH's profits had reached 10 figures for the first time in the company's history with net profit surging 40 per cent to $1.26 billion (£0.6 billion) in 2004. "The year was an excellent one for the group," he told analysts last night. "This was obtained in spite of very unfavorable currency impact." Crediting celebrity ad campaigns, including Uma Thurman for Louis Vuitton and Tiger Woods for Tag, with some of the financial success, Arnault added that Brad Pitt's appearance as the star of a recent Tag Heuer campaign contributed considerably to the growth of the watch and jewellery division, whose profits rose to $16.2 million (£8.4 million) in 2004 from loses of $64 million (£33 million) the year before. "Of course, one of our board members hadn't heard of Brad Pitt," the gazillionaire, in understandably jovial temper, told his audience. "I won't name him, but he's not the youngest member."
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