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And now, a word on the Arnaults…

Of all the headaches that LVMH has suffered in the past week—a report in the Financial Times about accusations of sexual harassment at Moët Hennessy, a customer database breach at Louis Vuitton in the U.K., Trump’s intention to enforce a 30 percent tariff on European imports to the U.S., and a Milanese court’s investigation into Loro Piana’s labor practices in Italy—its lowest moment may have been closer to home. The French business magazine Challenges, in which LVMH owns a minority position, downgraded Bernard Arnault and his family to the second-wealthiest in France, having been leapfrogged by the Dumas heirs, who run Hermès. (The Wertheimers, who own Chanel, are still in third place.)

Of course, it’s impossible to know whether this calculation is accurate. These lists are usually sport, and inevitably place too much weight on public information, like stock prices and related valuations, rather than actually accounting for the byzantine complexities of how the ultra-rich manage their wealth. But the switcheroo did underscore the relative value of the Dumas family’s single brand compared to the Arnaults’ 75 maisons, and the diverging fortunes of these clans and their businesses. Shares of LVMH have decreased 30 percent in the past 12 months, while Hermès’s stock price is up 15 percent.

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If nothing else, the success of Hermès has highlighted the stark challenges at LVMH. Yes, Loro Piana is growing at a controlled clip, and Louis Vuitton is stable—even if the second drop of the Murakami collaboration was not a blockbuster like January’s multicolor run. But sales are down by double digits this year at several brands in the LVMH Fashion Group, which drives the majority of the parent company’s profits. Dior is down more than 20 percent, and Celine has dropped even more. (A rep for LVMH did not respond to a request for comment on the sales figures.) There’s no denying that the company is navigating a crisis—one that even good numbers at Sephora, which is far less profitable than a leather goods brand, can’t totally mask.

I suspect that Arnault and other senior executives saw this coming in the late 2010s, but the artificial post-pandemic boom may have instilled a false, if temporary, confidence. Succession planning has been underway at LVMH for years, and recently, some dominos have fallen into place. But shareholders’ decision to extend the age limit for the C.E.O. to 85, earlier this year, is the latest sign that Arnault grasps the challenges, and likely realizes that only he can solve them before handing the company to the next generation. This inflection point for the luxury industry may make him feel more essential than ever to the longevity of his creation.

Intimations of Arnault’s plans are already being sprinkled throughout the company. I’ve previously documented the decision to bring the well-regarded executive Damien Bertrand back from Milan and Loro Piana to assist Pietro Beccari at Louis Vuitton, and to summon Pierre-Emmanuel Angeloglou from Fendi to work under Delphine Arnault at Dior. Of course, questions abound about who will end up running the Fashion Group—could it be post–Louis Vuitton Beccari, or post-Dior Delphine, or another executive, like Celine’s Séverine Merle? (Sidney Toledano’s rebound into power is so temporary that they haven’t even called him the C.E.O. in press releases. I suspect the decision has already been made.)

There are other problems that need to be addressed first at the individual brands and divisions, starting with the situation at Moët Hennessy. The Financial Times report outlined accusations of sexual harassment and bullying among multiple employees, but it also reflects the challenges of that sector, which involves far more third-party distributors than most LVMH businesses. Regardless of whether Arnault chooses to eventually spin out the alcohol division—which many investors would like him to do for various reasons I’ve outlined—the business needs to be modernized. The exit of senior leaders, including group C.E.O. Philippe Schaus and Jean-Marc Lacave, may have been related to personnel issues, but it also may have been inevitable.

You can understand why Arnault installed longtime group C.F.O. Jean-Jacques Guiony, the consummate adult in the room, to work with his son Alexandre. Moët Hennessy needs to be streamlined, but more importantly, it needs to be professionalized. Alexandre’s repositioning of Rimowa might be the model for how this works out: LVMH needs to run more like P&G, which means getting the culture at every brand in order.

The appointment of Michael Burke as head of the Americas may also fulfill the same objective. Burke, who prides himself on having remade Fendi, is the closest thing LVMH has to a turnaround expert. And, unlike many less-weather-beaten luxury executives, he welcomes a challenge. After stepping down from his brief tenure running the Fashion Group in 2023, it was unclear whether Burke would take another full-time position. He was still around—and yes, still close with Arnault—but many senior executives chose to dismiss him as a relic of a bygone era.

There are two competing narratives making the rounds about the real reason that Arnault put Burke, who is in his mid-sixties, in charge stateside. Some view this gig as a token of thanks for years of loyal service—a sinecure of sorts, similar to former group managing director Toni Belloni’s appointment as president of Italy. In this version of events, Arnault has given Burke one final opportunity to oversee a familiar market, execute one last high-profile turnaround, and be near his family before retiring. It’s a perfect swan song for someone who has created tremendous value for Arnault during their four-plus decades together.

Others, however, have interpreted Burke’s appointment as a sign that Arnault was sufficiently concerned about his most important market. Many of LVMH’s brands are still underpenetrated in the U.S. And while Tiffany may be improving, it needs to grow fast in order to take advantage of the upswing in hard luxury sales. Burke’s expertise in real estate was surely part of this decision, too. Anish Melwani, who runs the U.S. business, has posited to U.S. executives that nothing is changing, but the reality is that he’s more of a regional manager type with relatively little category expertise compared to Burke.

In the end, both interpretations of the appointment are probably right: Now that Burke is around, I could see LVMH becoming more acquisitive in the U.S. market. I still believe Ralph Lauren is out of the question, but as the market for luxury goods changes, and the culture changes, LVMH will change with it. The businesses it operates will need to change, too.

And yet, even if the Arnaults persuade Trump to exempt luxury goods from his tariffs, and the new iterations of Dior and Celine actually sell, will that be enough? In a recent episode of Fashion People, I asked the legendary former Journal fashion correspondent Teri Agins whether she thought things had irrevocably changed. “It’s permanent,” she told me. “There’s a race to the bottom on everything cheap, cheap, cheap…”

Fast fashion, the secondhand market, pristine counterfeits, the casualization of our wardrobes, the overconsumption of leather goods… all of these things have created a perfect storm, from which an already consolidated industry can only emerge diminished. Nobody understands that more than Bernard Arnault. And he may be the only one who can figure out the way forward.

The next time I’m in New York City, my first stop will be Library180, the new (actual) library at 180 Maiden Lane that houses a collection of the most important magazines ever published. The library was started by former V interns Nikki Igol and SN37 founder Steven Chaiken, a.k.a. Mr. Ruthie Friedlander. [NY Times]

The big deal out of Sun Valley: Apple offered to pay $150 million to stream F1 in the U.S. [Puck]

Michael Grynbaum talked to Emily Sundberg about his Condé book. [Feed Me]

Speaking of Condé, remember when Katie Grand and Jonathan Newhouse started Love magazine? Now, Juan Costa Paz, who was Vogue’s global creative director for a minute, has bought Love with his business partner and is relaunching it independently. [BoF]

Like Girls, Lena Dunham’s new show, Too Much, is a little too honest in the best way possible, with a great soundtrack. And there are lots of fashion, beauty, and interior design choices made that are worthy of discussion. I look forward to The Cut’s forthcoming essay that tries to ruin it for us, and Rhonda Garelick interrogating Meg Stalter’s beautiful hair in The New York Times. (That’s just a joke; I have zero knowledge of either of those publications’ edit calendars.) [Netflix]

Until tomorrow,
Lauren

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