Bernard Arnault has spent four decades building the construction company he inherited from his father into luxury leader LVMH, becoming one of the world’s richest people in the process.
Meticulous, demanding and sometimes ruthless, the 75-year-old remains deeply involved in running his empire and does not like discussing succession with outsiders. But behind the scenes the billionaire, who in 2022 raised the age limit for his role as chief executive to 80, is carefully laying the groundwork for his five children to one day lead the almost €400bn company.
Two of his sons are poised to join the LVMH board at its annual meeting on Thursday, leaving only his youngest without a seat as Arnault sets up generational handovers both within his family and among the executives who work alongside them.
“Five years ago, you could have argued that if something happened to Arnault, you would have an interim, non-family member chief executive while you wait until the kids grow up and have more experience,” said Erwan Rambourg, global head of consumer research at HSBC. “Now you don’t need that intermediary person because they’re at that level.”
At stake is the future leadership of the world’s biggest luxury group, spanning fashion houses such as Dior and Louis Vuitton to hotels and jeweller Tiffany & Co, at a time when the wider sector is grappling with a slowdown following an unprecedented pandemic-era boom.
People close to the group say it is too early to say who will take the top job: although his eldest child Delphine holds the most senior position within his empire as chief executive of Dior and a member of the executive committee, analysts point to possible scenarios in which two or more of the heirs could run the company in concert.
LVMH’s size and market share also mean its next generation of leaders will need to be more inventive to maintain growth and will no longer be able to rely on China, which drove the sector’s expansion for much of the past decade, for momentum.
Arnault, whose family owns 48 per cent of LVMH’s share capital and 64 per cent of the voting rights, is seeking to avoid the fate of other French business dynasties, where poorly managed successions can sink fortunes.
In the rarefied world of France’s business elite, the fall of the Lagardères — whose missiles-to-media group fell into debt and was sold off in pieces by the son after the patriarch’s unexpected death — stands out as a cautionary tale.
Arnault had a front seat to the unravelling, first as a close friend and tennis partner of the father, then as an investor in the family holding company as the son tried and ultimately failed to ward off a takeover by corporate raider Vincent Bolloré.
Avoiding a similar fate at LVMH is paramount. All Arnault’s children work at the group, where they have been paired with mentors among his top executives, having been prepared for their roles since they were young, accompanying him as teenagers on weekend store visits or trips to overseas operations.
“For Arnault, the family unit is sacred, so everything is organised around that,” said a person close to the group.
Shareholders on Thursday will vote on the board appointments of Alexandre Arnault, a 31-year-old senior executive at Tiffany, and his 29-year-old brother Frédéric, who was recently appointed head of LVMH Watches. Delphine, the 48-year-old chief executive of Christian Dior, and Antoine, the 46-year-old head of image and communications for the group, took their seats at roughly the same age.
Arnault’s youngest son, 25-year-old Louis Vuitton watch director Jean, is expected to join his siblings on the board in due course, according to people close to LVMH.
The Arnault family and LVMH declined to comment.
In addition to changes in the family’s roles, the group’s managing director Antonio Belloni, 69, will step down after 23 years as Arnault’s right hand, to be replaced by Stéphane Bianchi, the LVMH head of watches and jewellery who is a veteran of family succession at cosmetics group Yves Rocher.
“The non-executive directors and independent directors are there to respect the rules of governance but the Arnault family also has €200bn invested in this venture,” said one person familiar with the company’s operations. “It’s a natural evolution of the family’s representation.”
Three of the five children have been appointed to new roles within the group and its holding companies since the start of 2023, including Delphine’s appointment to head Dior, the group’s second-biggest brand, in February last year.
As the next generation moves up, the patriarch’s lieutenants step aside to facilitate it. “One doesn’t deny an Arnault kid,” said the person close to the group. “In the end it is a familial group.”
For the family, managerial appointments are considered more important than administrative ones, said the person familiar with operations, who said “the fact that Delphine was appointed to Dior is much more significant than the fact that Frédéric and Alexandre will join the board”.
Under a structure Arnault set up at the family holding company in 2022 to reinforce long-term control and unity, the family members each have an equal vote and need to be unanimous on important decisions regarding LVMH such as changes in their shareholding or the group’s strategic direction. Arnault views operational experience as a training ground for this, and holds regular lunches with all five children to discuss the business.
“His belief is that [the children] would be better shareholders if they know the business inside and out,” said another person close to the group. “When it comes to who will take over from him, and how it will work, it’s early to be able to say that. But my hope is that merit will prevail over emotion.”
The Lagardère case is not the only one on which Arnault has ruminated on as he works to secure a lasting empire. The decline and break-up of US conglomerate General Electric is another, while many of the assets he bought to build his realm — including Christian Dior — were procured from family dynasties that had fallen on hard times.
“Bernard Arnault is obviously eternal but he also isn’t getting any younger, so it’s important to have a new team of people with a longer time horizon in front of them,” said the second person close to the group. “The more gradually this can be done, the better.”
For investors, the handover was expected as top LVMH managers such as Belloni, Sidney Toledano, 72, and Michael Burke, 67, advance in years. LVMH’s record on selecting leaders is strong and Arnault is known for being ruthless in removing those not up to the task, but that dynamic is shifting as the next generation of the family steps up.
“These are big boots to fill. You’ve had a generation of Burke, Belloni, and Toledano who are extraordinary managers,” said Flavio Cereda, luxury portfolio manager at fund manager GAM.
“The risk now is he could be blinded by family . . . perhaps giving too much responsibility to your kids as opposed to an outside manager who might do a better job,” Cereda said. “To be clear we have no evidence of that, but this wasn’t a risk before because, with the exception of the [two eldest] kids from the first marriage, the others were too young.”
While much of the focus has been on the family transition, Bianchi’s elevation to group managing director is geared to LVMH’s new phase.
The 59-year-old joined in 2018, making him a relative newcomer by the standards of LVMH, where most top managers’ time at Arnault’s side can be counted in decades. He is credited with helping family-owned Yves Rocher weather a difficult generational transition after the death of the founder, shaping scion Bris Rocher — just 19 when Bianchi became chief executive in 1998 — to take over the business.
Bianchi’s promotion is “a huge sign of preparing a next generation”, HSBC’s Rambourg said. “He’s got a phenomenal reputation in France for having salvaged the Yves Rocher group and preparing the next generation there. That’s why you want someone like that.”
He was hired as one potential candidate for future leadership, exemplifying LVMH’s practice of fielding several options. “There are people that are more dedicated to being in the trenches . . . [Bianchi] is one of the executive community and more senior group that is able to be a leader of leaders and a good coach,” said the second person familiar with the group.
LVMH’s emerging leaders will also need to be even savvier in order to continue growing in a more mature global luxury market where the group already dominates, and without the same kind of boost from China.
Cereda estimates LVMH has gone from having 14 per cent share of the global market for personal luxury goods in 2018 to 24 per cent today — and could rise to 30 per cent in the coming years.
“You want innovators, smart management that is clearly aligned . . . but whereas before it was mostly external people that have worked with Arnault for a long time, now you have people who haven’t been there quite so long and you have the kids, so he has to get that balance right,” he said.
After all, if “an external manager doesn’t work — if you don’t get along with the family, disagree with Arnault, or don’t deliver — you will not last long”.
