Bernard Arnott: The Head Of Luxury Empire

The most luxurious brand group in the world belongs to LVMH. When it comes to these four letters, no one does not know how to do it. What is this soul character?

In 2011, LVMH, the world's largest luxury group, threw 3 billion 700 million euros to acquire Bvlgari, Italy's high-end watch and jeweler Bvlgari (Bvlgari).

This time, Bernard Arnott, the president of LVMH, who was always calculating and calculating, was unconventional. He could not wait to bring the world's third largest jewellers into the territory with high premium and favourable conditions for the Bvlgari family. Where does his generosity come from?

Arnott, the head of the world's first power in luxury goods, is well known for his LVMH. It is precisely because of the two rounds of economic recession in the 90s of last century that LVMH was able to achieve today's giant and achieve the same pattern of two strong drinks and clothing and leather goods.

In the past, many cases showed that Arnott had always been patient with hunting luxury brands. He didn't wait until the economic downturn or the brand valuation was at a low level. He seldom had a hand in buying Loewe, so the acquisition of Fendi was no exception.

But this time, he did not have the patience to wait until the cheap time. On the day of signing the contract, Bvlgari's market value was 2 billion 300 million euros. According to the purchase price, LVMH paid a premium of 60%, equivalent to 40 times of Bvlgari EBIT (pre tax profit) and two times of LVMH's own p / E ratio. LVMH has never had such a favourable condition.

LVMH Bernard Arnott

What made Arnott change his past style and take the Pearl of Italy? The reason seems plain. He needs Bvlgari very much.

The study found that in the clock and jewellery department where LVMH was founded, the income, business profits and brand grades were at the bottom, but their operating profit was second only to drinks and beverages. Clothes & Accessories Leather goods two strong, but also has obvious room for improvement. The addition of Bvlgari can not only enhance the strength of the short board, but also fill the gap of the top of the tower, complete Arnott's brand of watches and clocks in Pyramid, and then smooth the business cycle risk in a more balanced group business.

Arnott hopes to build more than just a few iconic brands, but also a luxury empire.

In March 2011, he himself jumped to the fourth place of Forbes's world richest list with a net worth of $41 billion. As the richest man in Europe, Bernard is not as popular as Americans Bill Gates and Warren Buffett. However, the luxury brands he built, such as Louis Vuitton, Dior (Dior), Givenchy, jensis (Zenith), Hennessy (Hennessy), and TAG Heuer, have long been known.

LVMH family

Arnott has almost all the shares of LVMH, and this company is bound to be full of family color. Arnott repeatedly declared in public that his goal was to keep LVMH under the control of the Arnott family. His son Anthony and daughter Delphine were educated like him when he was a child, and he was educated as a family member, and Arnott treated his own children as grandfather did to him.

Although Delphine and Anthony both said they had no pressure to work for their father, they still had a passive contact with business at a very young age. When Arnott fought for LVMH ownership in 1989, he told Anthony, then 12 years old, the story of the commercial war. After the exclusive LVMH, Arnott insisted on taking his children to the store every Saturday morning. This young man born in 1977 is like his father, funny, fashionable and elegant. After earning her MBA degree, Anthony spent two years learning Internet investment and becoming a general manager of 13 LVMH stores. He had worked as a sales assistant for 3 months at the LV store in Champs Elysees. {page_break}

In contrast, Delphine, born in 1975, was even more regarded by outsiders as Arnott's successor. Arnott also appreciated her achievements in the promotion of LVMH brand. Delphine graduated from EDHEC business college in Paris, then went to London Business School to pursue further education and worked in McKinsey Co for 3 years. Delphine has been a perfume saleswoman in Paris Dior store. In 2001, she formally joined the LVMH group and was responsible for developing and promoting the new varieties of Dior perfume. In only 4 years, she became the only female member in the board of directors, enjoying a high reputation in the company.

Arnott's second wife is a French Canadian mixed blood painter, who has 3 children. The biggest Alessandro is Arnott's new object to visit the family company. Although he is only 18 years old, he has shown a strong interest in joining LVMH. The experience of the United States has not changed Arnott's feelings about blood relations. He has built up a brand in an almost extreme way. In fact, it is also purifying and maintaining a pure "brand DNA".

At present, Arnott's management team and family strategy are working well. He hopes that 3 younger sons can join in their own businesses. But when asked who will take the place of the most suitable family successor, Arnott has never mentioned a person's name. "Do not always bring conspiracy theories in the family business. Arnott family is much smarter than others." He said he would never retire voluntarily at any time. He had 20 to 25 years to plan for the future.

Merchant artist

Arnott was born in a real estate businessman's family. In order to let him know the importance of hard work, his grandfather took him to visit the company building when he was 7 years old. At the same time, Arnott learned another kind of temperament, the merchant's elegant taste. He began to be fascinated by art as all French people. After earning his degree in engineering, Arnott entered the family business. In the early 80s of last century, he spent 3 years in the United States in order to expand his family real estate brand in overseas market. The American experience made the French young man, who had always dressed elegantly and romantically, learned the aggressive way of operation of the American people. So in 1984, when the French government looked for a buyer for a bankrupt textile enterprise named Boussac, Arnott decided to try a breakthrough.

Arnott persuaded his father to borrow $80 million from his family assets, plus $15 million he owned, and he tried to buy him. At that time, the size of the Arnott was nearly doubled, including Dior. After the success of the acquisition, Arnott devoted all his enthusiasm to the new industry, and his branding strategy soon brought him back to life. 3 years later, the LVMH group was founded. Arnott transferred the Dior perfume brand to LVMH and sold it to the $400 million price. With this money, he completed all holdings of LVMH.

What Arnott wants to build is not just a few iconic brands, but also a brand. Luxury goods Empire. In order to expand the high-end luxury brands of LVMH, Arnott started a series of big acquisitions in 1990s, and his moves almost swept the fashion industry.

Create brand like LV

In 1854, a French Aviator founded LV, who made the first LV suitcase with waterproof canvas and designed the famous LV logo for him in 1896. In the early twentieth Century, long distance ocean travel began to spread, and LV was able to enter the high-speed boom. By the 1980s, the smooth LV brand went into a blind alley: the choice of boring housewives was expensive and exquisite, but nothing new. In 1987, Arnott bought LV, his unique fashion and luxury business philosophy to revitalize the aging brand. {page_break}

Shortly after taking office, Arnott fired a group of LV senior executives. He appointed Eve Mark as the new president and hired young New York hip-hop stylist, Jacobs. According to Arnott's request, Jacobs has read the history of LV. He has set a series of modern elements on the old LV. The most classic two LV handbags are designed like this: one is to make LV logo graffiti, and another one is the Japanese artist Murakami Takashi participating in the design of the five color six color LV logo on the pure white background. Arnott was very satisfied with Jacobs's design and described her as "the perfect fusion of modern tastes and LV's historical traditions". This is what Arnott has always wanted.

"New wine in old bottles" is only part of Arnott's brand philosophy. He also inherited LV's flaws in quality. At the LV headquarters in Paris, France, there is a crusher specially designed to destroy the unqualified LV products. The inspectors check the sutures on the handbags one by one, or one or less, will be sent to the shredder. Arnott stipulates that if you carefully count the sutures of the LV handbags you purchased, you will find that there are 4 mouths on the left and 5 on the right, so you can return them unconditionally.

When Arnott summed up his secret to control the brand, he said, "the establishment of luxury brands is much more difficult than other businesses. It needs to create a kind of consumer demand that does not exist at all. To fashion luxury brands, we must follow a formula: by mining the history of the brand and interpreting it with suitable designers, we can define the brand identity; strictly control the brand quality and sales; ingeniously create momentum and attract eyeballs." Whether Gucci, Gucci or Prada (Prada), competitors dare not say that they have done this, but Arnott let LVMH have everything. Givenchy Men's wear Ozwald Boateng, the designer, once said with great emotion, "in LVMH, Arnott is God."

Marching into the third world

When Arnott recalled the first time he brought LV to China in 1992, he said: "at that time, there were only bicycles and no private cars could be seen. Who can imagine that LVMH has opened 25 stores in China." Arnott is always a forerunner, and his first impressions have helped him win the market with his competitors. Asia and developing countries are his next target.

Like bringing luxury goods to China to take to other developing countries, Arnott still has a long way to go. He said he likes to see people react in stores, like competition, like leading and expanding their advantages. Now, he is betting on a piece of land that knows Mongolia bags, nomads, butter milk, more than Fendi's Fendi and Guerlain perfume (Guerlain). This is Mongolia. In 2009, LVMH opened its first exclusive store in Ulan Bator, capital of Mongolia, with a population of only 1 million 100 thousand and a distance of 120 km from the Russian border. However, the store has already started to make profits. Ulan Bator

Dior (Dior): Bernard Arnott's first trophy

When Bernard left the country and lived in the United States, Dior perfume began selling in department stores in the United States. This brand from his hometown comforted his homesickness and made him feel very fond of the brand of Dior. {page_break}

The Arnott family was originally in the construction business. Bernard's father's construction company was also famous in French architecture. When he was young, he showed the eye of a successful businessman and made preparations for entrepreneurship. In 1981, when French President Mitterrand came to power, a large number of conservative entrepreneurs in France chose to leave their homes and go to the us to develop their businesses. Bernard was also one of them. In the United States, he learned a set of capital operation methods which his colleagues called "100% capitalism" in the future. After returning to China, he thought the French fellow countrymen were caught unprepared.

His first attempt to acquire the weapon was in 1984, the target of attack was the Dior group (Dior) fashion house. At that time, the poor group was on the brink of bankruptcy because of poor management. Bernard bought the group as a whole with only 15 million dollars in cash plus 80 million dollars in loans. As for why Bernard chose to start his own business, Mr. Bernard once said that when he left the country and lived in the United States, he began selling it in department stores in the United States. This brand from his hometown comforted his homesickness and made him feel very fond of the brand of Dior.

And his actions proved this. After the completion of the acquisition, he immediately sold most of the assets of the group, leaving only two departments of Dior fashion house and lopeh Marshall department store, thus opening his way to dominate the luxury industry. At that time, Bernard was ambitious to claim that Dior would come back to life and become the world's first fashion brand. But no one believed him at that time.

Old trick: control LVMH

"Don't give me Dior perfume? Then come to my name." This battle Manifesto is the most vicious hostile takeover campaign in French history. Its origin began when Bernard wanted to withdraw the Dior perfume department from LVMH.

Bernard's most impressive "battle record" is probably the war he bought for LVMH. The whole campaign started with Bernard's desire to recover the Dior perfume department from LVMH.

The Dior perfume department was sold to LVMH group by its former owner long ago. After purchasing Dior fashion house, this is the case. brand Bernard, who is obsessed with memory, wants to put Dior perfume in the bag, but at this time, LVMH group, like Zhongtian, how can she sell the Dior perfume of the perfume Department separately? Bernard lost her life in this service.

However, God favored the business wizard, and his chance came soon.

Mo t Hennessy and Louis Vuitton are two independent companies. The former is a first-class wine manufacturer, and the latter is the top leather manufacturer. At that time, the two big companies were merged into the original LVMH group in order to reduce the risk of hostile takeover. However, because of the balance of ownership distribution, the president of Louis Vuitton, Henry Recamier, and Alain Chevalier, President of Mo t Hennessy, do not give in to the board of directors. In order to beat the power of Alain Chevalier in the board of directors, Henry Recamier drew Bernard to invest in LVMH.

Henry Recamier, I am afraid, did not expect him to "lead the wolf into the house", which started the most vicious hostile takeovers in French history. Bernard had long been a grudge against LVMH when he refused to sell Dior perfume. He used the contradiction between them to acquire a large number of LVMH shares at a very low price. Soon, Henry Recamier defeated Alain Chevalier with the help of Bernard. However, Bernard did not stop buying LVMH shares. Two years later, he finally squeezed Henry Recamier out of the board of directors, holding the power of LVMH group.

"Don't give me Dior perfume? Then come to my name." This sentence became Bernard's most vocal battle manifesto. {page_break}

Luxury Empire territory expansion

Through a series of acquisitions, LVMH group, apart from "rocking Qian Shu" Louis Vuitton, also covers several categories of fashion areas, such as wine and spirits, fashion and leather products, perfume and cosmetics, watches and jewellery, and boutique retail.

Louis Vuitton, Celine, Kenzo, Givenchy, MarcJacobs, Fendi, DonnaKaran, TAGHeuer, Hennessy... These world-renowned and stylish luxury brands, which you can never expect, are linked to them by a group called LVMH.

Immediately after that, LVMH was unable to accept and continue to make big acquisitions in other luxury subdivision industries. In terms of clothing, LVMH acquired French brands such as Givenchy, Kenzo and Celine, Spanish brand Loewe, British shirt brand Thomas Pink, American brand Donna Karan and Marc Jacobs, Italy brand Karan and so on. In leather and leather shoes, it bought Italy leather traders Fendi and StefanoBi and French shoe maker Berluti. In jewelry and timepieces, swallow Chaumet, Zenith, Omas and so on, and buy TAGHeuer with us $474 million. In perfume and make-up, Kenzo perfume and Perfumes Loewe are purchased to further enrich its perfume department. In 2001, LVMH bought 6 cosmetics companies at once: Bliss, Hard Candy, BeneFit Cosmetics, UrbanDecay, MakeUp For Ever and Fresh. In terms of retail channels, LVMH1996 bought a DFS duty-free shopping mall for $2 billion 500 million in 1997, bought cosmetics retail store Sephora in 1997, set up e-commerce website eLuxury in 2000, and bought two French high-end department stores, LeBonMarch and Samaritaine, and a yacht retail companies Cruise Line Holdings Co.. In terms of media, D.I magazine and two magazines purchased in 2001: Connaissance des Arts and Art&Auction. In addition, LVMH took over from Ford Motor Co in 2007 to become the new owner of Aston Martin, the top British car manufacturer.

Through a series of acquisitions, LVMH group, apart from "rocking Qian Shu" Louis Weedon (LouisVuitton), also covers wine and spirits. Latest fashion And fashion products such as leather products, perfume and cosmetics, watches and jewellery, etc. They include more than 50 brands: Fendi (Fendi), Givenchy (Guerlain), Guerlain (Guerlain), Heuer Watch (TAGHeuer), seamount (Sephora), global duty free shop (DFS), Hennessy (Hennessy) and so on.

The contest between Gucci:LVMH and PPR

Bernard has been in Waterloo for the first time in his career after buying a large number of luxury brands. At this point, Gucci has also become a pain in Bernard's heart forever.

In the hands of Bernard, those noble brands that were picked out for a long time seemed to be playing with dice. After acquiring a series of heavy and luxurious old cards, Bernard suffered his first career in Waterloo.

Apart from LVMH, we all know that PPR and Richemont are two big luxury groups. PPR is the abbreviation of Paris spring department store. Its brand owns Gucci, Balenciaga, Stella McCartney and so on. Chairman Francois Pinault is the son of sawmill boss. He dropped out of high school and began to do business. His first wife was a daughter who was a good supplier to his father. With the support of his father-in-law, FrancoisPinault set up its own trading company and came up with the first pot of gold. After that, he founded the PPR group, and made profits through the acquisition and selling operations wisely. In 1992, Francois Pinault bought the holding spring department store.

In January 1999, LVMH hungry wolf rushed to Gucci, buying 34% of the latter and becoming a major shareholder of Gucci. Gucci suddenly lost his freedom and was restrained by LVMH. Faced with this situation, GucciCEO made a request for LVMH to buy Gucci in full. Bernard refused. The reason is simple: all acquisitions cost a lot of money. Bernard hopes to achieve the goal of killing two birds with one stone by holding Gucci: on the one hand, controlling Gucci at a small cost, thereby restraining the strong competition of Gucci, and on the other hand, obtaining considerable profits from this investment.

However, he failed this time. After being rejected by LVMH, Gucci management decided to use the killer trick: expand capital stock and sell 42% of the total share capital to $3 billion for Bernard's French company PPR. After the expansion, PPR became the largest shareholder of Gucci, while LVMH's share in Gucci was diluted from 34% to 20%. Moreover, Gucci also reached a strategic agreement with PPR to ensure the independence of Gucci and continue to develop multi brand strategy.

Gucci's actions annoyed Bernard, who appealed to court to try to win the battle against PPR. However, the lawsuit is still in suspense. After many twists and turns, PPR and LVMH reached an agreement to withdraw from competition. At this point, Gucci has also become a pain in Bernard's heart forever.

This is Bernard Arnott, the soul of an imperial luxury group.