Bernard Jean Etienne Arnault is a fashion tycoon standing among tech giants as the richest men in the world. The Frenchman briefly became the world’s richest person in May 2021, thanks to his ownership stake in LVMH (Louis Vuitton Moet Hennessy). The luxury fashion house stands as a testament to Europe’s consumer habits over the past 20 years.
He helped steer the company to dominance since taking over the textile group that owned Christian Dior in 1984. Since then, he became known for his extravagant purchases, including a $150 million superyacht, $40 million private jet, and $35 million private island, among other things.
Here’s the story of how Bernard Arnault made his money.
How Bernard Arnault Got Started
Arnault was born in Roubaix, France in 1949 and started his work career at his father’s civil engineering company Ferret-Savinet. Through his tenure, the company shifted into real estate before acquiring a textile company. His mother had a fascination with Christian Dior, so he bought the company and became known as “the Terminator.”
That’s because he laid off 9,000 workers and sold off most the company’s assets over the next two years, keeping only the Dior brand and Le Bon Marche department store. By 1988, he partnered with Guinness in a holding company and spent over $2.1 billion to become the majority shareholder of LVMH.
The company owns high-end fashion brands like Fendi and Givenchi, along with those already mentioned. And Arnault briefly became the world’s richest person when it recorded $17 billion in revenue during its first quarter of 2021. That’s a 32 percent increase from the same quarter of the prior year.
Running these companies with an iron fist helped create an efficient centralized process to be carried across each brand. This produced higher quality goods with higher margins that resulted in a global luxury empire.
How Did Bernard Arnault Make His Money?
Arnault broke through as one of the top 10 richest Europeans in the summer of 2005, with a $13 billion fortune at the time. His investments in luxury brands ultimately created his fortune, as he took over a large portfolio of well-known names.
Dior was bankrupt when he bought it, and he revived it by stripping everything away but the brand itself. In doing so, he positioned the company to continue raking in enough profits to afford LVMH and its owned brands.
Of course, although he appreciates the quality, he says he doesn’t care about the money. Like famed investor Warren Buffett, Arnault looks at a company to determine where it will be 10 years down the road. He plays the long-hold game and builds a roadmap for long-term strategies within his company.
This strategy helped him exponentially grow his fortune over the ensuing years. By 2019, his massive fortune put him in an elite financial group of people who have a net worth over $100 billion. It’s his business savvy, along with a focus on brands he’s passionate about, that made Arnault a billionaire.
Is Bernard Arnault a Billionaire?
As of mid-2021, Bernard Arnault’s fortune was estimated at $193.8 billion. This puts him in the running with titans like Bill Gates, Jeff Bezos, and Elon Musk as possibly becoming the world’s first trillionaire. This feat is notable because he’s one of few Europeans in the Forbes list of billionaires, a list that’s predominantly topped by Americans.
He’s also one of few non-tech executives in the top 10 richest people list. Besides Berkshire Hathaway’s (BRK.B) Buffett and L’Oreal’s Francoise Bennecourt, the wealthiest in the world are from the tech world.
It’s also noteworthy that he eclipses the combined fortune of the Walton family which owns the majority of Walmart’s shares. This means the high-end retailer could be as good of a long-term investment as the discount retailer and signals a shift in people’s spending habits to higher quality goods.
How Is Bernard Arnault So Rich?
COVID-19 caused a global travel shutdown for over a year, and ongoing travel restrictions changed the way people spend. That flipped when the world reopened and people spent on status symbols to show prosperity when reconnecting with their friends, family, and associates in real life.
Demand for luxury goods in China especially skyrocketed in early 2021, and that fueled record revenues and sparked a buying frenzy on LVMH stock.
Arnault is known for spending on big-ticket purchases, but he also reinvests his company’s earnings wisely. The company is both vertically and horizontally integrated to ensure consistent quality and distribution on a global scale.
This helped it create a roadmap that couldn’t be easily overtaken by Amazon (AMZN) nor Walmart (WMT) when both retailers became titans and squashed the competition.
What Companies Does Bernard Arnault Own?
We mentioned several companies above, but LVMH has dozens of brands under its umbrella. This includes wines and spirits labels like Ardbeg and Krug, fashion brands like Loewe and Marc Jacobs, cosmetics brands like Fenty Beauty and Benefit Cosmetics, and jewelry like Bulgari and Tiffany & Co.
It also has a retail footprint through a series of boutiques that give it a useful sales channel. On top of this, it owns a luxury yacht maker and several high-end hotels.
Arnault is an expert in all things luxury and fully understands his customer base. They are high-net-worth individuals who have high quality standards of products and services. By providing exactly what they need, he built a luxury empire that made him one of the wealthiest people in the world.
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