LVMH Tops $500 Billion Market Value

(Photo Credit: Emma Houghton/Unsplash)
(Photo Credit: Emma Houghton/Unsplash)

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

Cheap beer might seem like an appropriate beverage for today’s economy, but there’s no suppressing champagne tastes.

LVMH, the luxury goods empire presided over by the world’s richest man, set a European record on Monday by surpassing the $500 billion milestone. In the US, that kind of market cap is usually reserved for Silicon Valley companies with visionary mission statements about changing the world for the better. Yet while Big Tech has suffered, LVMH is thriving with its old-world opulence.

Succession Sessions

LVMH CEO Bernard Arnault has never exactly been a pauper, but this year saw him overtake Elon Musk and Jeff Bezos to become the world’s richest man, with a net worth of $212 billion. That’s because LVMH’s stable of luxury brands including Moët, Christian Dior, and Louis Vuitton, have managed to continue booming while other industries have sputtered. Louis Vuitton alone doubled its sales revenue from $10 billion to $20 billion between 2018 and 2022.

China’s re-opening of its economy also played a significant role in helping boost LVMH’s market cap over the $500 billion mark. Lilia Peytavin, a European portfolio strategist at Goldman Sachs in Paris, told Bloomberg that luxury goods have exactly what tech is lacking at the moment: fat margins.

With the company’s fortunes so flush, the question of who will eventually take over from the 74-year-old Arnault is looming larger and larger. In distinctly Logan Roy-esque fashion, Arnault has installed his five children in LVMH’s upper echelons:

  • Arnault appointed his daughter Delphine to head up Dior, LVMH’s second-biggest brand, in January. A month before that he promoted his son Antoine to run LVMH’s holding company.
  • Meanwhile, Arnault’s three youngest sons, Alexandre, Frédéric, and Jean respectively run Tiffany & Co., Tag Heuer, and Louis Vuitton’s watch division. At 24 years old, Jean Arnault just about qualifies as Generation Z.

A recent Wall Street Journal profile on Arnault reported that once a month, he summons his children to a 90-minute private lunch at LVMH’s HQ and reads out pre-prepared questions about the business from his iPad. You gotta wonder what Christmas morning looks like chez Arnault.

Que Sera, Sera: Arnault’s children might have a few years to wait to find out whether one of them is the heir apparent, as Arnault told investors in January he’d raised the retirement age of LVMH’s CEO and chair position to 80. The WSJ profile does suggest that, unlike Logan Roy’s view of his TV brood, Arnault considers them to be des gens sérieux…