I’m talking about Bernard Arnault, Chairman of LVMH. He built an empire selling crazy expensive stuff to anyone who can afford it. But the cool part of this story is not what he sells. It’s how he built it in the first place. Not through high fashion. Instead, he did the old school way — like a Wall Street raider. Here’s how:
1/ Seed of an empire
It’s the roaring 80’s. Bernard has been grinding away as a real estate developer and is ready for his next move. The French government is looking for someone to take over a struggling textile firm called Boussac. With some boardroom hustle, Bernard wins the deal. But he’s actually not interested in textiles — he wants just one of Boussac’s assets: Christian Dior. Bernard has a fire sale and gets rid of everything. He goes all-in on the iconic fashion house. Within 3 years, Dior hits $1.9B in sales with profits of $112M. And Bernard’s about to put those profits to work.
2/ Going big
In 1988, he forks up $1.5B to buy 24% of LVMH. But the current shareholders see his threat and start buying up shares to stop him. So Bernard keeps going, upping his stake and securing the voting rights. Now he’s in charge. Just one more thing to do. He fires the insiders who tried to block him. And in 1989, he’s elected chairman of LVMH. Now the real work begins.
3/ Major growth
Bernard is an acquisition machine, loading up with the most luxurious names he can find. There’s the fashion division with Celine and Givenchy. Fragrances like Fendi and Kenzo. Watch brands like Hublot and Bulgari. And storied retailers like Sephora and Tiffany’s. He doesn’t always get his trophies though. He tried to buy Gucci, but shareholders fought back. Bernard ultimately gave up, but walked away with a cool $700M for his troubles.
4/ My take
Bernard follows a few tricks of the tradecraft to keep his empire on track. → Let brilliant creators work their magic. Bernard put world-class talent in charge of his brands. People like Virgil Abloh and Pharrell Williams have all steered LVMH to huge success. → Design leads everything. It’s the fashion equivalent of product-led growth. Bernard believes the people making the product should be showcasing it too. So at LVMH, advertising lives within the design teams. → Smart financial engineering. Bernard has always been a numbers guy. Last year, LVMH hit $79B in sales with a juicy $14B profit. No doubt he’ll use that cash to buy even more bougie brands.
