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PARIS– Just a week after LVMH Moët Hennessy Louis Vuitton’s market capitalization hit 250 billion euros, a record on the Paris Stock Exchange, the head of the luxury group has been named “Manager of the Decade” by French business news channel BFM Business.
Bernard Arnault, chairman and chief executive officer of LVMH, accepted the award during an evening program on Monday flanked by guests including French Finance Minister Bruno Le Maire.
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BFM Business noted that during the last decade, LVMH has tripled sales and quadrupled profits, but Arnault insisted that profits were not a goal.
“So the market capitalization, which depends partly on the offer and demand at any given time and how the stock market is performing, is an indicator, a consequence, but it must not be an objective,” he said.
The executive had warned for the last few years that a major economic crisis was looming. “No one listened to me, not even my colleagues within the group, and this crisis came about. What I had absolutely not anticipated was that it would be a health crisis,” he said.
He noted that governments had managed the situation better than the last major global economic meltdown in 2008, when the bankruptcy of Lehman Brothers almost triggered a collapse of the worldwide banking system. “Today, we are in a different situation,” Arnault said. “We spent a lot of money, but we never came close to a real [economic] catastrophe.”
In a follow-up interview broadcast on Tuesday morning, he noted that LVMH’s global network of almost 5,000 stores had allowed it to absorb the shock better than smaller competitors. With 75 brands, including Louis Vuitton, Dior, Guerlain and Sephora, it is the world’s biggest luxury group.
“I don’t want to seem pretentious, but it’s true that a group like ours emerges stronger from a crisis because its economic weight allows it to weather these difficult moments better than others,” Arnault said, noting that LVMH has been able to continue investing in advertising.
“Europe is the zone that is suffering the most right now, but at the same time, China has bounced back in a surprising way; Japan is faring quite well with relatively few deaths, and an economy that is stable; and the situation in the United States is worrying on the health front, but on the economic side, for the time being – I don’t know what the new president is going to do – it seems to be doing well,” Arnault said.
Asked whether LVMH plans further acquisitions following its purchase of U.S. jeweler Tiffany & Co., Arnault merely replied: “I am a dreamer by nature.”
He and Le Maire did not comment on the circumstances of the acquisition, which LVMH at one point threatened to call off, citing a French government request to defer the transaction due to a U.S. threat to slap tariffs on a range of French products. Since LVMH and Tiffany made up in late October, LVMH has made no further mention of the French government letter that purportedly jeopardized the deal.
The administration of President Trump has threatened to impose tariffs on $1.3 billion worth of French goods, including cosmetics, soap and handbags, in retaliation for a French tax on American technology companies. Le Maire reiterated on Monday that France intends to tax digital giants such as Amazon, Google and Facebook this year, noting that their market capitalizations frequently exceeds $1 trillion, four times that of LVMH.
“Since tax returns are confidential, I won’t compare the taxes paid by LVMH and those paid by digital giants, but it will come as no surprise that those with a lower market capitalization pay more taxes than those with a higher market capitalization. This is one of the injustices we want to correct by taxing those that make profits without creating material goods,” he said.
Le Maire said the French economy, which is forecast to contract by 11 percent this year as a result of two lockdowns designed to curb the spread of COVID-19, should recover quickly next year. “France will see a sharp rebound in 2021. We saw in the third quarter that as soon as the lockdown measures are lifted, a very strong recovery is possible,” he said.
Arnault concurred. “If we manage to stem this health crisis, France will see an extraordinary recovery,” he said.