In This Article:
Europe’s richest man has seen the value of his luxury empire slump behind arch rival Hermès after the trade war plunged his business into “unknown territory”.
LVMH, which is run by French billionaire Bernard Arnault, saw more than €20bn (£17.1bn) wiped off its value on Tuesday after warning of a slump in sales.
The stock market sell-off means that LVMH, which owns brands ranging from Louis Vuitton to Moët & Chandon champagne, has lost its long-held position as the world’s most valuable luxury company. It has ceded the title to French rival Hermès, a company Mr Arnault tried to buy 15 years ago.
Mr Arnault and his family’s wealth fell by about $9bn (£6.8bn) on Tuesday. However, the 76-year-old remains the sixth richest person in the world, and the wealthiest in Europe.
The share slump follows a statement by LVMH on Monday evening which said its sales had fallen by 2pc so far this year.
It comes as Donald Trump’s blizzard of tariffs upends the luxury industry. Cécile Cabanis, LVMH’s chief financial officer, said: “We all need to ... stay very calm because we are in unknown territories.”
Mr Arnault’s luxury empire has been caught up in the crisis just months after the billionaire praised Mr Trump. He attended the US president’s inauguration and said he had “witnessed the winds of optimism in that country”. He added: “Coming back to France is a bit like taking a cold shower.”
He later suggested expanding LVMH’s factories in the US to seize on growing demand in the country.
Since then, however, the luxury sector has taken a beating as Mr Trump ramps up his trade war. Spiralling tariffs on China and uncertainty over further levies have dampened consumer spending in the US. LVMH’s share price has slumped by more than a third since January.
The news that LVMH is now vying with Hermès to be the world’s largest luxury company will sting Mr Arnault.
The 76-year-old, who has run LVMH since 1989 and is known as the “wolf in cashmere” for his predatory approaches to rival companies, once sought to bring Hermès into his empire, triggering a row with its founding family.
In 2010, it emerged that Mr Arnault had secretly built up a large stake in Hermès through a series of structures including derivatives. He had claimed the move was “friendly”.
‘Handbag war’
However, the approach caused what was known as the “handbag war” as the Hermès family quickly staged a fightback. Bertrand Puech, Hermès’ chairman at the time, told French newspaper Le Figaro: “With friends like these, who needs enemies?”
Five dozen descendents of Thierry Hermès moved to pool their shares into a holding company to protect against a full takeover. The two sides later agreed to a truce, with Mr Arnault agreeing to relinquish most of his stake in 2014.