Loro Piana CEO Frédéric Arnault bets on scarcity to sustain brand’s rise
Family scion admits to feeling pressure in new role as Arnault siblings vie to succeed their father at the top of LVMH
Loro Piana chief Frédéric Arnault has vowed not to chase short-term sales that compromise the luxury textile brand’s exclusivity, as one of the contenders to succeed his father at the top of LVMH admitted to feeling the pressure of his new position.
Arnault said Loro Piana “could be selling many more” pairs of its signature €1,000 White Sole loafers but that LVMH’s ultra-luxe brand was choosing to undersupply demand to prevent the sailing shoes becoming ubiquitous.
“Sometimes short-term growth can be to the detriment of long-term sustained success,” he told the FT in his first interview since becoming chief executive of the Milan-based fashion house last year at the age of 30.
The approach contrasts with the more aggressive growth strategies pursued by brands such as Gucci in a tough luxury market. Loro Piana, along with other brands at luxury’s top end, has weathered the prevailing downturn better than most: Italian filings show its revenue rose 7.5 per cent to €1.72bn last year and net profits increased by 12 per cent to €434mn.
Arnault said the enterprise value of the brand has risen from €2.7bn when LVMH acquired it in 2013 to about €11bn today.
His appointment last year marked the start of a fresh opportunity for Arnault to push his case to eventually succeed his father, Bernard Arnault, at the helm of the world’s most powerful luxury group.
Arnault is one of five children of the LVMH chair and chief executive, all of whom work in the family business. The eldest, Delphine, runs Christian Dior and her brother, Antoine, runs the holding company that owns the Dior brand and oversees LVMH’s image.
Alexandre, 34, is deputy CEO of LVMH’s drinks business Moët Hennessy, while Jean, the youngest Arnault sibling, works in the group’s watchmaking division.
Frédéric’s progress through LVMH has made the reserved and analytical character a focus of speculation in the group’s succession race.
After eight years in LVMH’s watch business — Arnault was running TAG Heuer at the age of 25 — he said he wanted to move into fashion because it is “the core” of LVMH’s business.
While acknowledging the pressure of being the founder’s son, Arnault said he was choosing to embrace it.
“I mean, it’s true, there’s pressure. Now I endorse it,” he said. “It’s the role of the CEO to accept this pressure and not be overwhelmed by it.”
The second-youngest Arnault sibling said his father had given his children “the will to contribute and to work in the business” but that “we never felt forced about anything”.
Loro Piana traces its roots to the namesake Italian family’s 19th-century wool-trading business. As well as cashmere, the brand now sells clothes made from the fibre of vicuñas, a camelid that lives high in the Andes. Loro Piana jackets produced with the material can cost more than €20,000.
Since taking over last year, Arnault has centred Loro Piana’s strategy on tightening control of its supply chain in order to secure access to scarce raw materials and bring more specialist craftsmanship in-house.
It comes after an Italian court temporarily placed Loro Piana under judicial administration last year over alleged worker exploitation at subcontractors in its supply chain.
Arnault said the supplier at the centre of the case had “concealed” its use of an unauthorised subcontractor but he conceded that Loro Piana’s audits — known as “capacity checks” — had failed to detect that the supplier lacked the capacity to fulfil the orders it had received.
Loro Piana, one of several luxury houses caught up in the probe, has since hired specialists to carry out regular on-site checks while still conducting unannounced external audits.
The brand’s new knitwear factory in Ghemme, Piedmont, described by Arnault as “the largest industrial investment in the history of the brand”, opens this month.
“We could go faster . . . but we want to make sure that we strategically build the knowhow properly,” Arnault said. “Which sometimes means, yes, not going as fast as the demand or as [fast as] the market would be asking.”
“What I do today is not for the next quarter, the next six months or year,” he added. “It’s for decades [to come].”
Loro Piana’s young chief also ruled out aggressive price rises, saying that “prices should rise only at a pace customers can continue to justify against the quality of the product”.
It may simply be the case that Loro Piana customers won’t tolerate any more: analysts at Bernstein have calculated that the brand’s average product price rose by 67 per cent between 2019 and 2025.
Arnault said Loro Piana’s position as a higher-end luxury brand has helped it to be “more resilient” through the downturn. However, he added that it would be “a mistake to forget about the accessible, more affordable part of the market,” predicting that the industry’s largest customer group would “come back in a stronger way in the future”.