Daughter of world’s richest man takes the helm at Dior as LVMH reshuffles its two biggest fashion houses

Shares of LVMH rose 1.7% to €769.10 in early European trading.

“Succession planning in strategic roles has been instrumental to the success of LVMH’s key brands over the past 20 years, hence today’s management changes are significant, we think,” said Citi analysts Thomas Chauvet and Lorenzo Bracco, in a note to clients.

They noted how the senior Arnault has been increasing the family grip on LVMH — such as last year transforming family holding group Financiere Agache into a limited partnership.

“This company structure is not widely used in France other than at Hermès and Michelin, with one aspect being tighter control over the company. More recently Antoine Arnault (45), Arnault’s second child and currently CEO of Berluti and Chairman of Loro Piana, has also become CEO of Dior SE, the holding company controlling LVMH (itself controlled by Financiere Agache),” said the Citi analysts, who rate LVMH a buy with a 780 price target.

Beccari’s predecessor Michael Burke will take on new duties and report directly to the senior Arnault. Citi analysts said the Dior label was “re-energized” under Burke since 2018, with sales increasing threefold to €6.6 billion. Another change announced was that U.S. jeweler Tiffany will now be part of the group’s watches and jewelry unit.

The luxury sector is one that investors should perhaps not ignore, said analysts at Baader Europe, in a note to clients that published Tuesday.

“It is hard to believe that a sector worth €730 billion could gain 11.5% in the first 6 trading days of the year. That would be Luxury with LVMH weighing in €384bn but as agile as a startup,” said the analysts. “We are clearly at a loss when it comes to trying to explain where the future excess growth could come from that would propel such a surge in value for the sector.”

They noted that Asia opened its doors ages ago, China’s wealthy will probably now choose travel over goods and “U.S. households are apparently splurging for a bit longer but are clearly extending themselves that bit more. One can dream of India as the next frontier for European Luxury, but this may not be enough if Chinese ladies were to change tack,” they said.

However, the luxury sector may “deserve a premium as well for being one of the few sectors which can afford to raise prices without that being called an entente as prices are an essential part of the dream component. Just as well, Luxury is not encumbered by truckloads of regulation as is the case with most big sectors,” said Baader analysts.

The senior Arnault himself is ranked as the world’s richest billionaire, with a net worth of $178 billion, according to the Bloomberg Billionaire’s Index. And his wealth progression has been night and day when compared with former No. 1 billionaire, Tesla
TSLA,
+2.99%
CEO Elon Musk, who gained notoriety for being the first person to wipe $200 billion off his own fortune.

Some have blamed the fading fortunes of Musk and Tesla on the CEO becoming bogged down by his takeover of social-media group Twitter last year, while the company also missed fourth-quarter delivery expectations.

As the below chart shows, Arnault’s fortune and Musk’s have been heading in opposite directions since late last year. Shares of LVMH are up another 12% for 2023 so far, though they lost 6% overall in 2022, the weakest performance since 2011. But Tesla shares plunged 65% in 2022, the worst-ever year for the EV maker.

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