Bernard Arnault, founder and patriarch of family holding company Groupe Familial Arnault, overtook electric car and rocket manufacturer Elon Musk last week. He wrapped up the number one spot in two of the most popular lists of the world's richest people. According to Bloomberg, the billionaire currently has a fortune of USD 163 billion. The question may arise, however, how does luxury goods tycoon becomes the richest man despite global fears of a recession?
The story of Bernard Arnault
Bernard Arnault was born in 1949 in Paris. His father was an engineer and owner of a construction company and his mother was a pianist. Arnault graduated in law and economics before embarking on a career in business, working for his father's company. In 1984, Arnault took control of Christian Dior (Dior), which was then in financial difficulty. Under his leadership, the company restructured and became hugely successful, becoming one of the most important fashion houses in the world. Arnault continues to serve as CEO of Christian Dior. In addition to this, he is also the founder and CEO of LVMH, the world's largest luxury goods corporation, which includes many brands in various segments, including fashion, jewellery, perfume, spirits, watches, electronics and other luxury products. Arnault is also involved in many philanthropic initiatives and is known for his commitment to art and culture.
The value of the billionaire's fortune has doubled in the past two years. Arnault's fortune currently consists of 79% of the shares of fashion house Christian Dior (Dior), 15% of luxury goods company Louis Vuitton Moet Hennessy (LVMH), owning brands such as Louis Vuitton, Lou Fendi, Givenchy, Kenzo, Loewe, Marc Jacobs, Celine, Berluti, Emilio Pucci, Thomas Pink, Loro Pian, among others. The remainder of the wealth is made up of smaller private investments and as much as US$10 billion in cash and cash equivalents.
Source: Conotoxia MT5, Dior, Daily
Elon Musk's dethronement
Elon Musk's fortune has declined by more than 40% since the beginning of the year and now stands at US$155 billion. To a large extent, this appears to be linked to declines in the share price of Tesla (Tesla), which accounts for 34% of the billionaire's portfolio. The valuation of the carmaker's assets has fallen by 57% since the beginning of the year, and the company does not seem to be helped by further reports of more Tesla shares being sold.
Source: Conotoxia MT5, Tesla, Weekly
Why is the luxury goods industry doing so well in the downturn?
Louis Vuitton Moet Hennessy's (LVMH) year-to-date revenue increased by 28% year-on-year. What may seem interesting is that the company recorded the highest revenue growth in Europe (up 43%). The company attributes much of this growth to organic growth. It might seem, however, that Europe, hit by the energy crisis and the economic slowdown, would be the first to cut back on spending on luxury goods. However, we could be dealing with what is called the 'snob' effect in economics, which is the phenomenon of buying goods according to social status level. This could explain why, when most people are struggling to cope with rising costs caused by inflation on basic products, the wealthiest people do not seem to feel it as much.
Source: Conotoxia MT5, LVMH, Weekly
Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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