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Bernard Arnault Talks Hedi Slimane, Rihanna and Karl Lagerfeld at LVMH’s Annual Shareholder Meeting

The group’s chairman and chief executive also addressed criticism around his Notre-Dame donation, and concerns from animal rights activists about LVMH’s use of exotic skins.
LVMH Avenue Montaigne Paris | Source: LVMH
By
  • Lauren Sherman,
  • Laure Guilbault

PARIS, France — LVMH chairman and chief executive Bernard Arnault took a victory lap at the luxury group's annual meeting Thursday, for the first time touting the early success of Hedi Slimane's Celine and teasing high-profile projects to come.

During his presentation to more than 2,000 shareholders, the executive underscored the company's continued commitment to creating a desirable product that offers consumers "meaning" and "a reason to buy." In 2018, the company posted record results, generating global sales of €46 billion euros, with Rihanna's Fenty Beauty line generating nearly €500 million in revenue and Louis Vuitton posting more than €10 billion.

Shares jumped last week after the company reported strong sales for the first quarter of 2019, ending Thursday at €352.80, a record high and a 37 percent gain for the year. The company also announced a dividend of €6 per share for the 2018 fiscal year, up 20 percent from €5 per share a year earlier.

Hedi Slimane is an outstanding designer, who managed to achieve global success at Dior Homme

Arnault called out successes at smaller maisons including Loewe, as well as a strong performance at Dior, boosted by the arrival of menswear designer Kim Jones and chief executive Pietro Beccari. He also touted Celine creative director Hedi Slimane, whose first store concepts and collections have finally materialised, calling his polarising arrival a "great success." (On last week's first-quarter 2019 earnings call, chief financial officer Jean-Jacques Guiony said it was "too early" to discuss the collection's commercial success.)

"Hedi Slimane is an outstanding designer, who managed to achieve global success at Dior Homme and who is well on his way with women's and men's collections [at Celine]," Arnault said, calling Slimane's Autumn/Winter 2019 show, which was much better received by critics than his debut, sensational.

“There already are waiting lists in stores to buy [his creations],” he added. “I just hope we’ll manage to manufacture sufficiently.”

The meeting, held at the Carrousel du Louvre on Thursday, featured a panel of LVMH executives fielding questions from a wide range of investors. Alongside the analysts, investors and family trust managers were representatives from People for the Ethical Treatment of Animals, which bought stake in the group in 2017 in order to apply pressure regarding its use of exotic skins. At one point, an outspoken individual shareholder filed a poetic complaint regarding his seat in the auditorium, which was further back because he owned less than 10 shares of LVMH stock.

It was probably the longest collaboration ever between a designer and a house

Arnault gave a simple “next question” response to that particular grievance, but he addressed several more pressing points around the company’s strategy with at least a little more depth.

He also announced Fendi's plans to stage a Karl Lagerfeld tribute show in June, which will feature creations from his 54 years designing for the Italian furrier, followed by an exhibition.

“It was probably the longest collaboration ever between a designer and a house,” he noted. There was no further communication regarding who might succeed Lagerfeld at the house.

Arnault was tight-lipped regarding the upcoming launch of Rihanna's standalone apparel brand, dubbed Project Loud France, in which LVMH is thought to hold a 51 percent stake.

“I appreciate your interest in Rihanna. I am [interested] too, she's an extraordinary singer,” he said. “But we like surprises…. As it’s a surprise, I will not tell you more.”

On the acquisition of hotel group Belmond, which closed this week, the executive underscored the significance of “experience” to the overall business, noting that most properties would not be absorbed into the company’s Cheval Blanc hotel group.

“We will study on a case-by-case basis,” he said, but the intention is to keep the two groups as separate brands.

Arnault also bristled at criticisms regarding the group's €200 million donation to help rebuild the cathedral of Notre-Dame, which was ravaged by a fire on Monday.

“It’s appalling that in France you are criticised for doing work in the public interest,” he said, adding that the company had already hit the limit on tax deductions under the country’s patronage law because of its art museum, Fondation Louis Vuitton.

Our essential partner is nature

Arnault offered new details regarding LVMH’s approach to social responsibility and sustainability, areas where rival Kering speaks out publicly on a regular basis.

“Our essential partner is nature,” Arnault said, noting that the group has a “particular interest in ecology” and any process that can make product development more sustainable, such as tight regulation on supply chains and using new tools such as Edibox, a tool that helps make packaging that has a smaller impact on the environment.

It has also examined its leather use in certain businesses, with Arnault noting that the company is researching alternatives. He also mentioned that the company’s internal carbon fund, introduced in 2015, doubled in 2018.

LVMH has also demonstrated an interest in developing young brands with sustainable business models. Last year, the group invested in conscience-luxury label Gabriela Hearst through one of its investment arms, LVMH Luxury Ventures.

When pressed by Peta regarding LVMH's use of exotic animal skins, including crocodiles and ostriches, general counsel Bernard Kuhn said that the group has established a "new and extremely constraining system" for certifying and auditing breeders, noting that all farms supplying its Singapore-based tanneries would be certified by the end of 2020. Rival Chanel recently announced it would stop using exotic skins, although unlike LVMH and Hermès, it does not own crocodile farms.

Shareholders also voted on nominees to the board of directors, including activist-photographer Yann Arthus-Bertrand, who will serve as a board observer, advising the company regarding environmental initiatives, as well as Sophie Chassat, a philosopher, who will be a permanent board member.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

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