LVMH shake-up marks generational shift in power
Observers suggest further changes are to come as Bernard Arnault fosters renewal
A reshuffle in the upper echelons of LVMH last week marked the biggest management shake-up in luxury in years.
The changes reflect how chief executive Bernard Arnault is looking to a younger generation of leaders and positioning LVMH, the world’s largest luxury group by revenues, for the next chapter of growth.
One thing, however, remains constant: the 68-year-old Mr Arnault is still keeping everyone guessing as to his plans to hand over the reins of power to any of his five children.
After several quarters of strong revenue growth and a period of relative calm, LVMH confirmed a generational shift in power: Sidney Toledano, 66, longstanding head of Christian Dior, is stepping down from the fashion house to be replaced by Pietro Beccari, the chief executive of Fendi and a rising star with the group.
Mr Toledano will become executive chairman at LVMH Fashion Group, the division that encompasses eight of its smaller brands. He is replacing Pierre-Yves Roussel, 52, head of the fashion group for the past two decades, who will become a special adviser to Mr Arnault. He has been increasingly spending time in the US, where his fiancée designer Tory Burch is based.
The moves follow a similar generational transition at Moët Hennessy, LVMH’s wine and spirits division, where Christophe Navarre has been replaced by Philippe Schaus, previously chief executive of LVMH’s global travel retail outlet DFS Group.
Mr Arnault said the appointment of Mr Beccari at Dior signalled “a new era”. The rise of the charismatic Italian, who worked in consumer goods before he joined Louis Vuitton in 2006, is emblematic of Mr Arnault’s approach to talent.
Mr Beccari is a prime example of how LVMH prefers to nurture talent through its own brands rather than the higher-risk strategy of bringing in leaders from elsewhere, says Luca Solca, an analyst at Exane BNP Paribas.
Mr Beccari worked at Louis Vuitton for six years, latterly as marketing director, before moving to Rome to head Fendi. He is credited with rejuvenating the brand through product innovation and sharpening its digital strategy, helping to build Fendi into LVMH’s third-largest brand by revenues, with sales passing the symbolic €1bn mark for the first time in 2016.
The management rejig at Christian Dior — a group that holds special resonance for Mr Arnault as the first luxury brand he bought in 1985 — is timely for several reasons.
In the past year or so Christian Dior Couture has settled in a new creative director. And in April LVMH announced it was buying the fashion house for €6.5bn in a two-step transaction that brought the entire Dior brand under the control of LVMH and tightened the Arnault family’s grip on the LVMH empire. “It felt like the right time for Sidney to move aside and leave the seat to the next generation,” says one insider.
Analysts say that LVMH is hoping to capitalise on Mr Toledano’s experience of international expansion and managing creative talent that he honed in almost two decades running Christian Dior.
“Sidney’s strong track record at Christian Dior means he can develop the smaller brands to become bigger and more profitable,” says Rogerio Fujimori, an analyst at RBC Capital Markets. “There’s some very high potential names, particularly Céline and Givenchy.”
However, the reshuffle also reflects how dynamics can change for rising stars within LVMH. Mr Roussel was once seen as a potential successor to late Louis Vuitton chief executive Yves Carcel but missed out on the job in 2012.
Any management changes at LVMH inevitably raise the question as to what sort of role Mr Arnault’s five children may play in the group’s future leadership, and the power dynamic between the two sets of children from his different marriages.
“I don’t see a clear-cut situation as far as succession is concerned, it’s too early,” says Mr Solca. “Arnault is giving his children different tasks and challenges to see how they fare.”
Three of Mr Arnault’s five children already have senior positions in LVMH. From Mr Arnault’s first marriage, Delphine is number two at Louis Vuitton and her brother Antoine is chief executive of Berluti and chairman of Loro Piana. He is close to new Christian Dior leader Mr Beccari from their time working at Louis Vuitton together.
And then there are the three sons from Mr Arnault’s second marriage — the two eldest have been brought into the family business. Alexandre helped source LVMH’s acquisition of a majority stake in German luggage maker Rimowa, where he is now co-chief executive. Frédéric, who turned 23 this week, is head of connected technology at LVMH’s watchmaker TAG Heuer. Meanwhile the youngest son, Jean, 20, is studying at Imperial College London.
Market observers have suggested that there could be further changes to come at LVMH, such as Antonio (Toni) Belloni, the 63-year-old group managing director, who could step back.
They have also highlighted Chris de Lapuente, 54, the well-regarded chief executive of LVMH’s cosmetics brand Sephora, as a potential successor. However, one person close to LVMH says that Mr Belloni, a key lieutenant of Mr Arnault, is unlikely to step down for several years.
Rather than any radical change, analysts and investors say the next generation of management at LVMH represents a healthy renewal as the luxury goods company continues to evolve under the watchful eye of Mr Arnault.
“Arnault is changing his generals but he’s not leaving the battlefield,” says a person close to him. “He’s at least a decade away from that — God willing.”