Editor’s Note
This excerpt introduces the formative years of Bernard Arnault, highlighting the determination and intellect that would later define his career. It traces his origins in northern France and the early perseverance that paved his path to success.
Bernard Arnault was born in 1949 in Croix, a small town in northern France known for wool processing. His family was well-off, with his father running a thriving construction company. Influenced by his grandmother’s historical stories, Bernard showed early signs of sharp intellect and determination. He initially failed the physics exam for the prestigious École Polytechnique but persevered, gaining admission after a year of focused study. His early internships taught him practical lessons: one at a railway station about careful packaging, and another at McKinsey & Company, where he realized his interest lay in hands-on management rather than abstract consulting.
Arnault began his career at his family’s construction firm, Ferret Savinel. In 1977, he ventured unsuccessfully into the Canadian housing market. He later convinced his father to sell the construction business and pivot to real estate development. The new company, Ferinel, focused on vacation homes and, within five years, became France’s largest private residential developer. Known for his impatience, Arnault would assign tasks at noon and check progress by 2 PM. An attempt to expand into the U.S. market in the early 1980s, starting with a Miami high-rise, was largely unsuccessful. He returned to France and eventually sold the real estate company (later known as Nexity) in 1995.
In 1984, Arnault targeted the struggling Boussac group, primarily for its crown jewel: the Christian Dior fashion house. Boussac’s founder, Marcel Boussac, had refused to modernize the textile operations, leading the conglomerate to the brink of bankruptcy. Arnault, though not the strongest bidder, secured the deal with support from the Willot family, another key shareholder. He took over a company burdened by excessive licensing (over 260 agreements), poor product quality, and a lack of creative direction.
Arnault invested heavily, launching a successful new line by Christian Lacroix, opening boutiques next to Chanel and Hermès to elevate the brand’s prestige, and acquiring a majority stake in the leather goods brand Céline in 1987.
Arnault mastered financial tactics like using cascading holding companies to maximize leverage and control. After restructuring, his business empire reached annual revenues of 11.7 billion francs. He then took parts of it public to raise capital. By 1987, his sights were set on LVMH.
The merger between Moët Hennessy (MH) and Louis Vuitton (LV) in 1987 created LVMH. MH’s Alain Chevalier sought a merger to fend off a hostile takeover, while LV’s Henry Racamier wanted diversification. However, their management styles clashed immediately—Chevalier favored organic growth, while Racamier preferred acquisitions. Their only agreement was acquiring a 10% stake in Hermès. The 1987 stock market crash caused LVMH’s share price to plummet by 50%, exacerbating internal strife.
Seeing an opportunity in the discord, Arnault secretly built a stake. When Racamier approached him for support, Arnault instead allied with Chevalier and Guinness, using a holding company to acquire a 24% stake in LVMH, becoming the single largest shareholder. He then merged Dior’s fashion and perfume divisions and continued buying shares.
The ensuing power struggle was intense. Arnault was excluded from LV’s events, prompting him to buy more shares. He eventually orchestrated a board meeting that proposed dissolving LV’s independent board and setting a retirement age of 70, directly targeting the 76-year-old Racamier. By 1989, with Chevalier having stepped aside, Arnault secured control, marking the beginning of his reign over the LVMH empire.
