Luxury kingpin Bernard Arnault installed his only daughter as head of the Dior fashion house in a management reshuffle at LVMH.
The 73 year-old “wolf in cashmere,” who recently overtook Tesla’s Elon Musk to become the world’s richest human, is expected to pass leadership of his company on to his children in the next few years.
That succession battle may very well be decided after he appointed on Wednesday Delphine Arnault to succeed Pietro Beccari as chair and CEO of the brand Christian Dior Couture effective February 1.
“Her keen insights and incomparable experience will be decisive assets in driving the ongoing development of Christian Dior,” the LVMH boss said in a statement.
The oldest of his five children at 47, Delphine is the only one to serve both on the board of directors and the executive committee of LVMH. Currently she serves as executive vice president of Louis Vuitton and supervises all product-related activities at the LVMH luxury marque.
Dior is believed to hold a special place in the empire cobbled together by Arnault that spans some 75 brands. It became the cornerstone of his vast wealth when he acquired it in 1984—after the idea was unintentionally planted by a Francophile cab driver in New York.
“He could not name the [French] president but he knew Dior,” Arnault often recalls.
Shares in LVMH, Europe’s most valuable company with a $420 billion market cap, traded 2.5% higher on Wednesday, outpacing moderate gains in France’s broader CAC40 blue chip index.
With its €64 billion ($69 billion) in annual revenue, LVMH is a loosely managed holding company: Fashion houses like Bulgari, Tiffany, and Tag Heuer are the real stars.
‘Don’t worry about profitability’
The number one job of their creative directors isn’t to study troves of marketing data about what needs and wants customers may have and then deliver on that. Rather, the designers are supposed to give their minds free rein in order to create a product people will innately desire no matter the price.
Management then is tasked with laying out a manufacturing process regardless of the materials used, netting the group a staggering 27% operating margin in 2021, the last full year of published results.
Some products flop, but enough succeed, and in the end the brand continuously reinvents itself. If this means his family as 48% controlling shareholders in LVMH are disappointed by the occasional poor quarter, then so be it.
“Money is just a consequence. I always say to my team, don’t worry too much about profitability,” Bernard Arnault told Forbes in 2017. “My real concern is what the brand will be in five or 10 years, not the profitability in the next six months.”
Instead of maximizing short-term results, the French luxury goods patriarch says, he runs his business based around three main pillars: creativity, quality, and entrepreneurship.
While he shares Elon Musk’s emphasis on long-term planning as the bedrock for success, he does not share the Tesla CEO’s professed love of the office. Even before the pandemic made it popular, the French mogul took a dim view of busy cubicle work as a measure of productivity.
“Don’t go to the offices too much. Stay on the ground with the customer or with the designers as they work,” he told the U.S. publication at the time. “I visit stores every week. I always look for the store managers. I want to see them on the ground, not in their offices doing paperwork.”
Delphine Arnault will no doubt have already internalized this message when she steps through the doors of Dior next month.
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