The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire
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The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire

Bernard Arnault drilled his offspring in math when young, assigned them company roles and mentors as adults, then made them joint owners of a firm empowered to run the luxury conglomerate

Thu, Apr 20, 2023 8:36amGrey Clock 10 min

PARIS—Once a month, Bernard Arnault gathers his children for lunch inside a private dining room at the headquarters of LVMH Moët Hennessy Louis Vuitton SE, his globe-spanning luxury goods company.

The meal, which lasts exactly 90 minutes, begins with the French billionaire reading aloud discussion topics he has prepared on his iPad, according to people close to him. Mr. Arnault then goes around the table, asking each of his five adult children for advice. He’ll seek an opinion on specific managers at the company, the people said, or whether it’s time for a shake-up at one of LVMH’s myriad brands, which stretch from the Champagne vineyards of France to handbag-making workshops in Italy and Texas.

Mr. Arnault, 74, currently the world’s richest person, has spent decades grooming his children to run LVMH. He drilled them in mathematics growing up and brought them along on business trips and negotiations. Today, Mr. Arnault is tightening the family’s grip on LVMH, parachuting his children into senior roles and empowering them to one day take over the luxury empire.

In elevating his children, however, Mr. Arnault has also amplified a long-running dilemma: Who will succeed him as chief executive and chairman of the world’s biggest luxury conglomerate? Mr. Arnault built LVMH, valued at $480 billion, by hunting rival luxury firms for corporate takeovers while also nurturing generations of fashion designers. That combination of killer instinct and finesse is why his rivals call him the “wolf in cashmere.”

His eldest child, Delphine Arnault, 48, appeared to many in the fashion world to pull ahead of the pack in January when her father made her chief executive of Christian Dior, the second-largest brand in the group. Paris was also buzzing weeks earlier when her brother Antoine Arnault, 45, became CEO of the listed company that holds the family’s stake in LVMH.

Nipping at their heels are the three sons from Mr. Arnault’s second marriage. Alexandre Arnault, 30, is the executive vice president of Tiffany & Co., with a high-powered network that includes Jay-Z and Twitter co-founder Jack Dorsey. Frédéric Arnault, 28, runs the Tag Heuer watch brand, while 24-year-old Jean Arnault is director of marketing and development at Louis Vuitton’s watches division. All three studied at top engineering schools, a qualification their father has called crucial to his own success.

Mr. Arnault has given no indication whom he will choose as his successor, saying only that it will be based on merit. When asked about the matter in January at a presentation of LVMH’s annual results, he drew a parallel between his recent decision to raise the retirement age of LVMH’s chairman and CEO to 80 and French President Emmanuel Macron’s contentious push to raise France’s retirement age to 64.

“As to succession, you may also have noticed that the retirement age—which is very much in vogue—has been extended,” he said.

With his children looking on from the front row, Mr. Arnault quipped that he could use some free time to hone his skills at tennis, his favourite sport. “The last time I played with Roger Federer, I think I won one point in a single set. Maybe I could do a bit better than that,” he said.

Mr. Arnault pulled ahead of Tesla CEO Elon Musk late last year as the wealthiest person on the planet, according to the Bloomberg Billionaires Index. His wealth was $208 billion on April 19, according to the index.

For decades, Mr. Arnault has run the company with top lieutenants such as Sidney Toledano, who led Christian Dior, and Michael Burke, chief of his biggest brand, Louis Vuitton.

Mr. Burke, 66, stepped down from Louis Vuitton in January to be with his wife before she died from cancer. Mr. Toledano, 71, is expected to give up his role running a stable of the group’s fashion brands, including Celine, Loewe and Marc Jacobs, in the coming months.

Both played key roles in mentoring Mr. Arnault’s children. He tends to pair them with executives who keep an eye on their performance. He will then ask, Mr. Toledano said, “about some of their character traits, or if there’s a need for a little correction.”

Delphine Arnault worked for 12 years at Dior under Mr. Toledano. She then joined Louis Vuitton in 2013, paired with Mr. Burke, who has long worked at her father’s side. Speaking at a farewell tribute for Mr. Burke in January, according to people present, she said it was “impossible to recall precisely my first memory of you. That’s quite logical after all because I’ve known you since I was born.”

Days later, Ms. Arnault attended Dior’s fashion show in Paris as she prepared to take over as the brand’s chief executive. She has an uncanny resemblance to her father, possessing his genteel manners, high forehead and a frame that is tall and slender.

She went backstage, where she offered an assessment of the handbags that had just gone down the runway. Glossy materials, she said, were making a comeback. The collection, she said, was “very elegant. A bit romantic.”

Mr. Toledano looked on like a proud dad. “She survived the Toledano-Michael tandem,” he said. “She’s vaccinated now. She’s received the two doses.”

Mr. Arnault hardly ever speaks about succession in public. People close to him say it has been on his mind for decades.

In 2003, he made a hospital visit to his close friend and tennis partner Jean-Luc Lagardère, who had undergone a hip operation, the people said. Mr. Lagardère was one of France’s most respected businessmen, having built an empire that included missile-maker Matra and publisher Hachette.

Two days later, Mr. Lagardère slipped into a coma after developing an infection, and died shortly thereafter. The executive, who was 75, hadn’t adequately prepared his succession. In the years that followed, his son Arnaud gradually sold off or relinquished what his father had built.

Mr. Arnault recently took steps to tighten his family’s grip on LVMH and pass it on.

In December he transformed Agache, the private holding company that ultimately controls LVMH, into a commandite, a French corporate structure that resembles a limited partnership and allows its controlling shareholder to wield significant power with a relatively small holding.

He also created a second entity, Agache Commandite SAS, that is owned by his five children, each with a 20% stake, according to France’s stock market regulator. The new company is empowered to take over the running of Agache and effectively end Mr. Arnault’s leadership of the company. Major decisions, such as dissolving Agache, require unanimous approval from his children.

The new company has a rotating two-year chairmanship among the children, who can’t sell their shares in it for 30 years without unanimous board approval. Once that period lapses, only direct descendants of the elder Mr. Arnault will be able to hold the shares.

One businessman who has known Mr. Arnault for decades compared the situation to Jean-Paul Sartre’s play “No Exit,” where the main characters are locked in a room together for eternity as punishment.

Mr. Toledano said he was confident the Arnault children can work through any disagreements because their father taught them from a young age to put the interests of the company first. “For now, they all get on great,” he said.

The children all consider themselves siblings and don’t refer to one another as a half brother or half sister, according to people familiar with their relationship. They are careful not to create any appearance of rivalry or conflict, these people said, adding that the five would never discuss or joke about who was best at something like tennis or piano—their father wouldn’t stand for it.

Mr. Arnault is “above all a pragmatic man,” Mr. Toledano said. “You have to choose whoever is best at a given point in time considering the challenges. It’s what he does with his managers, his advisers, and I think it’s what he’ll do with his children.”

It isn’t a given that LVMH’s future leader will be one of Mr. Arnault’s children, according to Mr. Toledano. “At no moment did he tell me, ‘I must prepare my children for my succession,’” he said.

Bernard Arnault was born in 1949 in Roubaix, near the Belgian border. His father, Jean Arnault, was a manufacturer and owner of the civil engineering company Ferret-Savinel.

He excelled at school and earned a spot at the Ecole Polytechnique, a highly selective engineering and science school that has shaped the elite since the French Revolution. Napoleon Bonaparte turned Polytechnique into the military academy it remains to this day.

Mr. Arnault and the 312 other students in his class would wake at 7 a.m. to a bugle and a flag-raising. He learned to march wearing the bicorne hat of the Napoleonic era that students don each year as they proceed down the Champs-Élysées in the Bastille Day parade.

Mr. Arnault recalled in a book of interviews with a French journalist how his education at Polytechnique helped lay the foundations for his conquest of the fashion world. “It is above all a program that gives you a rational mindset, which allows you to analyse a situation or a problem very quickly,” he wrote, adding that LVMH makes a point of recruiting young talent from the school.

Antoine Arnault was more blunt about his father’s esteem for the school. In an interview with Le Monde, the contents of which were confirmed by a spokesman, the eldest son recalled how hard it was to tell his father he wasn’t Polytechnique material. Neither he nor his sister attended the school.

“For him, only Polytechnique counts,” he added.

Mr. Arnault had Antoine and Delphine with his first wife, Anne Dewavrin. As a young father, he took a rigorous approach to his children’s education. They recount how he would call them into his office and drill them on math exercises in between business meetings.

Mr. Arnault moved his family to New York in the early 1980s after the Socialist leader François Mitterrand was elected president of France and vowed to tax the rich heavily. He spent two years in the U.S. building the business he had taken over from his father.

Returning to France in 1984, Mr. Arnault made his first move into the luxury business, gaining control of a textile company called Boussac Saint-Frères that was near bankruptcy. Tucked within it was a jewel: Christian Dior.

Dior became the archetype of Mr. Arnault’s budding empire. The haute couture house had redefined womenswear in the mid-20th century with the “new look” dress, and Mr. Arnault aimed to emphasise that fashion pedigree through aggressive expansion.

He sent Delphine in her early 20s to work at the namesake fashion house of John Galliano, a star designer who was also creative director of Dior. Mr. Toledano then took her under his wing at Dior. The executive recalled huddling with Delphine and her father before making the pivotal decision to fire Mr. Galliano after he was filmed making antisemitic remarks.

Mr. Arnault divorced in 1990 and later that year met Hélène Mercier, a Canadian concert pianist, at a friend’s house. Driving her home, Mr. Arnault told her about his struggles learning to play a collection of études by Frédéric Chopin. When they met again, for tea at Mr. Arnault’s, she asked him to play Chopin for her.

“He was shaking all over with stage fright but seemed determined to go all the way,” she recalled in her autobiography. “I felt that Bernard was suffering, that he was doing violence to himself to move me.”

The couple married and had three boys. People close to the family say Mrs. Mercier-Arnault applied the same drive to parenting that made her a famous pianist. She pushed her boys in music and in school, waking them at dawn to rehearse and study.

Mr. Arnault also threw himself into their studies. Mr. Toledano recalled a flight he took with Mr. Arnault back to Paris after a particularly gruelling trip to Asia. Mr. Arnault, operating on just a few hours’ sleep, pulled out a mathematics textbook and began to study. One of his younger sons was about to take the entrance exam to Polytechnique.

“I need to refresh my memory,” he told Mr. Toledano.

Alexandre Arnault applied to Polytechnique for undergraduate studies but didn’t make the cut. He was later accepted at the school for a master’s-degree program.

At LVMH, he quickly established himself as someone with his father’s ear. When he suggested buying German luggage maker Rimowa, his father told him the brand’s family owners didn’t want to sell. Alexandre wrote to the Rimowa family’s patriarch and traveled to meet with him, according to LVMH executives.

LVMH bought the company in 2017, and Mr. Arnault installed Alexandre as CEO. He gave the brand a makeover by forging collaborations with streetwear-savvy designers. One collection had the Supreme logo emblazoned on luggage. Another had a clear case designed by Virgil Abloh for his Off-White brand.

Mr. Arnault then sent Alexandre to help shake up Tiffany & Co., acquired in 2021 for $15.8 billion. Known for its engagement rings, the jeweler has struggled to gain traction with younger shoppers. Alexandre spearheaded a collaboration between Tiffany and Nike Inc. to make $400 Nike Air Force 1 shoes in all-black leather with a swoosh the color of Tiffany’s classic blue jewelry boxes. Ads proclaiming the brand was “Not your mother’s Tiffany” were plastered across the U.S.

The moves ruffled fashion executives who worried he was tarnishing a prestigious luxury brand. “Why on earth would Tiffany want to move away from that to become just another streetwear brand is beyond me,” said Ana Andjelic, former chief brand officer at Banana Republic.

Mr. Arnault’s two youngest children have hewed most closely to their father’s career track. Both attended a Jesuit high school, where they took literature classes taught by Brigitte Macron before she became the first lady of France.

Frédéric Arnault trained in classical piano and excelled at tennis. He was accepted at Polytechnique, where he took the same courses as his father. He then co-founded an electronic-payments startup, which he sold 18 months later.

In 2018, the elder Mr. Arnault recruited Stéphane Bianchi, an executive who had groomed an heir of the Yves Rocher cosmetics company, to lead LVMH’s watches business. Mr. Bianchi said Mr. Arnault told him from the start to work closely with Frédéric, who at the time was driving TAG Heuer’s digital strategy. Two years later, Mr. Bianchi made him CEO of the brand.

“My father, of course, gives me advice, but he also gives me a lot of freedom,” Frédéric said in an interview. In meetings, he has his father’s tendency to let others do the talking while he studies them, according to Mr. Toledano.

“He looks at you and he absorbs you. Sometimes he lets you talk for 10 minutes while he just absorbs,” he said.

Frédéric has a close relationship with his younger brother Jean, according to people close to them, helping to cultivate the 24-year-old’s fascination with the watch world. Jean went to the Massachusetts Institute of Technology to study financial mathematics. He then earned a master’s degree in mechanical engineering from Imperial College London, writing his thesis on the Tag Heuer carbon balance spring, a component of its watches.

He now works at Louis Vuitton’s watches division, spending much of his time at its factory in Switzerland. In March, he announced plans to relaunch the Gérald Genta brand with the support of the watchmaker’s widow.

In recent years, Mr. Arnault has tapped his children for advice on some of the more delicate issues facing his company. As inflation began to bite last year, fuelling public anger over wealth inequality, Mr. Arnault was worried the public outrage would ripple toward their family and LVMH, according to people close to him.

He went to his eldest son, Antoine, who had been pushing him to communicate more openly with the public about LVMH’s operations, the people said. Antoine suggested LVMH launch an ad campaign publicizing how much the company paid in French taxes last year and the number of jobs it created, the people said. His father took the advice.

This year, Mr. Macron triggered massive street protests with his plan to raise France’s retirement age. Photos of Mr. Arnault began appearing on “wanted” posters at the demonstrations, and protesters stormed into the lobby of LVMH’s headquarters, waving flares and flags. In the days that followed, Mr. Arnault began running his ad campaign in Libération and other leftist newspapers.

The luxury titan also asked his children for advice on how to handle the departure of Mr. Burke from Louis Vuitton, according to people familiar with the matter.

Mr. Burke, who remains an adviser to Mr. Arnault, built Louis Vuitton into a brand with $20 billion in annual sales while navigating personal tragedy. Virgil Abloh, the brand’s creative director for menswear, was diagnosed with cancer around the same time Mr. Burke’s wife, Brigitte, received a cancer diagnosis.

Brigitte Burke and Mr. Abloh bonded over their experience in the months leading up to the designer’s death in November 2021. The designer was a trend-setter in the fashion world. Brigitte was known for bringing employees together for meals.

“She did the cooking. I did the serving,” Mr. Burke said.

Mr. Burke needed to be at his wife’s side before she died in February. Mr. Arnault decided Pietro Beccari, who was CEO of Dior, would take over at Louis Vuitton. Delphine Arnault would become the new chief of Dior.

In late January, Louis Vuitton employees gathered at the Louvre, where the brand had just held its menswear show, for a private tribute to Mr. Burke.

“I’m very touched to be here,” Delphine Arnault told the group, according to people present, as her father and Mr. Burke looked on. One of her earliest memories, she said, was of Mr. Burke’s mustache. She showed them a photo of a young Mr. Burke in the 1980s, adding: “We’ve all learned so much by your side.”


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How the Middle East Became the Latest ‘Gold Rush’ in Marketing

The Middle East is set to be the fastest-growing marketing region in the world, driven by momentum in countries such as Saudi Arabia

Tue, Jun 18, 2024 5 min

Saudi Arabia’s fledgling advertising industry and continued growth in the sector in the United Arab Emirates are helping to make the marketing business in the Middle East the fastest-growing in the world.

Ad spending in the Middle East is projected to increase 8.1% to $6.6 billion this year, up from 3.5% last year, according to advertising research firm WARC.

That expansion is building from a much smaller base than in many other ad markets. The Netherlands alone will generate $6 billion in ad spending in 2024, up about 2.3%, WARC said. But it is also enough to outpace every other region in 2024, the firm said.

“It reminds me almost of the gold rush,” said Reda Raad , chief executive of TBWA\Raad Group, an ad agency based in Dubai, in the United Arab Emirates, that is part of the U.S.-based ad holding company Omnicom Group . “I don’t think we’re going to see this type of growth again in our lifetime.” TBWA\Raad has won eight new clients over the past year, with an increase in head count of 17% to accommodate the new work, Raad said.

Some international brands have long maintained a presence in the region. PepsiCo has considered the area a strategic market for decades, said Karim Elfiqi , senior vice president and chief marketing officer at PepsiCo Africa, Middle East and South Asia. Sponsorship deals with local stars such as Mohamed Salah , a soccer player from Egypt, “are a testimony of how over time, we have been part of the cultural fabric of the region,” Elfiqi said.

Other major brands have formed a more recent focus on the Middle East. The Lego Group opened a Middle East and Africa headquarters in Dubai in 2019, citing the size of the region’s young population. That office has developed work such as a Ramadan-themed campaign that ran in the U.A.E. and Saudi Arabia, among other locations.

‘Massive growth’

The Middle East’s ad market has lagged behind regions such as North America and Europe partly because of stricter cultural norms and regulations that affected business, as did a more limited media landscape and economic instability, according to Raad.

But marketing growth in the region is now being driven in part by newfound marketing interest in Saudi Arabia, where ad spending this year is expected to reach $2.1 billion, nearly double its level in 2019, according to WARC. Growth is also coming from the U.A.E., whose ad market is expected to reach $1.7 billion in 2024. Smaller contributors include Qatar and Kuwait.

The landscape has changed now because of economic diversification, increased connectivity and a move into the digital world, leading international brands to enter and invest in campaigns tailored to the region, Raad said.

Four years ago, Saudi Arabia made up a small proportion of business at Lightblue, a creative experience and tech agency based in Dubai. These days, 40% of its business comes from the country, says co-founder David Balfour , who opened an office in Riyadh last month as a result.

“The conversation used to be, ‘We’re going to do this in Dubai.’ Now, it’s ‘We’re going to do this in Dubai—and in Saudi.’” Balfour said. “We’re seeing massive growth in that region.”

There have been speed bumps. As government spending reaches huge levels , Saudi Arabia experienced a rare economic contraction in 2023.

But the country’s efforts to expand its economic pursuits beyond oil have led to the creation of new brands, which are seeking the help of marketing agencies to get the word out.

Marketers in the region are seeking help to stay on-trend in areas such as generative artificial intelligence and social media, said Greg Paull , principal of R3, a consulting firm that helps match advertisers with agencies.

“U.A.E. has been a magnet for the region for 20 years as more investment has come in—but with the new leadership in Saudi since 2017 [when Mohammed bin Salman was named crown prince ], this market has gone through remarkable growth,” Paull said.

Saudi Arabia has faced criticism for its human-rights record under the crown prince, the day-to-day ruler of the kingdom, especially over the 2018 killing of dissident journalist Jamal Khashoggi and the more recent jailing of women’s rights activists.

Mohammed has outlasted the international isolation that followed Khashoggi’s killing, however, and continues to pursue an economic diversification plan dubbed Vision 2030. The country last year unveiled plans for a new international airline called Riyadh Air, is investing billions of dollars to build its tourism and videogame industries, and in March hosted a golf tournament in Jeddah under the auspices of LIV Golf, the Saudi-backed league that has both challenged the PGA Tour and struck a deal to unify with it.

Changing tides

Vision 2030 also calls women’s empowerment a top social priority and seeks to increase the country’s employment rate of women.

Nada Hakeem , CEO and co-founder of Saudi creative agency Wetheloft, said the perceptions of hardships for women in the marketing and advertising industry are outdated and inaccurate.

“As a Saudi woman who founded my company in 2012, I’ve always felt supported by the creative community and the industry as a whole,” Hakeem said. “While every society may have its challenges, I can confidently say that these challenges have not hindered our growth.”

A progression of new laws, policies and incentives are making the industry in Saudi Arabia more inclusive and supportive for women, she added.

In certain parts of the Middle East, “absolutely, it’s still challenging, but they are making the right strides, and they have the right quotas and ambitions in place,” said Rebecca Bezzina , CEO for the EMEA region at R/GA, an agency owned by Interpublic Group of Cos.

“They’ve got wealth, they’ve got world-class ambition, world-class budget. They’re not shy of doing things in the right way,” Bezzina added, speaking of the region overall. “But they still have a talent shortage, especially from a creative and design and product point of view. So often what we’ve found our success has been that they’ve come to us and said, ‘Oh, we want a world-class agency to help us launch this new venture or do this new brand.’”

R/GA said it sees 69% more requests for agency work from marketers in the region today than it did five years ago. It recently handled a brand redesign for Banque Saudi Fransi, which wanted to reaffirm its Saudi roots with a modern identity, and created Weyay, the brand for a new digital bank from the National Bank of Kuwait.

The agency hasn’t notably increased its regional workforce, but it has made changes to facilitate working across Europe and the Middle East.

Other Western players are making moves to capture a piece of the growth. Advertising giant WPP has long worked in Saudi Arabia through units such as Ogilvy and GroupM, but in 2021 established a joint venture with a local company to create ICG Saudi Arabia, a communications and media company based in Saudi Arabia. Ad holding company Stagwell opened new offices for its media agency Assembly in Riyadh in 2021 and in Cairo in 2022.

Regional hospitality

Some executives said certain facets of business dealings in the Middle East are different than in other parts of the world.

Bertrand Morin, a group account director for R/GA who is based in London and works often with Middle Eastern clients, said he spends much more time speaking about personal lives and families with those clients than those in the U.K. or U.S. He has been invited to Middle Eastern clients’ homes to join their families for dinner, something that has never happened with clients elsewhere.

But others say it can feel surprisingly familiar.

Balfour, the Lightblue co-founder, said he was struck by the number of ad-agency workers recently having dinner at the Riyadh location of steakhouse chain Beefbar, and the scene’s similarity to far-off locations.

“The staff are from everywhere in the world. The service and the food is unbelievable. There’s a DJ playing,” Balfour said. “Apart from not having alcohol, you could be anywhere in the world.”


This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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