Bernard Arnault, the richest person in Europe, is having a bad year as its net worth plunges amid woes in the luxury goods industry.
Arnault, who controls LVMH Moët Hennessy Louis Vuitton, has lost close to $77 billion this year, the largest decline of any billionaire. His net worth now stands at $131 billion, placing him 13th on the list of the world’s richest people. At his peak, he was the wealthiest person in the world.
LVMH Stock Has Been in a Freefall
Arnault’s fortunes have changed as the LVMH stock has plunged. The stock ended the week at €378, its lowest level since November 2020, and 55% below its all-time high.
This retreat has coincided with weakness in other top luxury stocks. Kering, the parent company of Gucci, has slumped 70% from its peak, while Hermès has fallen 45% from last year’s high.
The same is happening in the United States, where companies like Tapestry (NYSE:TPR), Ralph Lauren (NYSE:RL) and Capri Holdings (NYSE:CPRI) have fallen by double digits this year.
While Arnault’s wealth has crashed, other top billionaires have flourished, with the stock market nearing a record high. Elon Musk has added $295 billion in wealth this year, while Larry Page and Jeff Bezos have added over $20 billion each.
LVMH’s business has come under pressure as competition in key markets like China has wavered. Demand has also been relatively muted in the past few years, with the US-Iran war impacting its business in the Middle East.
The most recent results showed that its revenue rose by just 2% in the first half of the year to €38.6 billion. Its wine business made €2.59 bilion in the first half, largely flat from the same period last year, while its fashion and leather goods segment dropped by 5% to €18.1 billion. Its perfumes and cosmetics business was also flat, while the watches and jewelry jumped by 3%.
These metrics led to a drag in its profitability, with the net profit remaining unchanged at €5.6 billion.
Arnault Has Focused on Succession
The ongoing Arnault’s weakness has also coincided with his succession issues. According to Bloomberg, he plans to simplify the ownership structure to ensure that the family controls the company for generations to come. In this approach, almost all of the family’s stake will be held by a single listed entity, Agache SCA, replacing Christian Dior.
As part of this transition, minority shareholders will have the option to sell their shares in a tender offer or remain shareholders alongside Arnault’s family.
At the same time, Arnault has placed his family members to lead several important groups in the company. Antoine Arnault is the CEO of Christian Dior SE, while Delphine Arnault is the CEO of Christian Dior Couture. Alexandre heads LVMH’s wines and spirits division, while Frédéric heads its watches segment.
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