Whoever wins medals at the upcoming Paris Olympics, one unequivocal victor is already clear: Bernard Arnault, the founder and CEO of LVMH. Despite France’s political unrest impacting LVMH shares and Arnault’s wealth, his brands are set to shine.
LVMH Moet Hennessy Louis Vuitton SE invested €150 million ($163 million) to be a key sponsor of the Olympics. Moreover, it holds the unique role of “creative partner,” with brands like Louis Vuitton and Dior deeply integrated into the event. This partnership includes cultural events and appointing French athletes as brand ambassadors.
This strategic move is unprecedented, blending luxury with sports. LVMH, now boasting sales four times higher than its rivals and a market cap of about €350 billion, reaffirms its dominance. Only Hermès International is in a comparable league.
However, Arnault needs this to succeed unequivocally. Following three years of immense growth, luxury sales are slowing. French political tensions and changing consumer sentiments towards luxury goods pose challenges. The acquisition of Neiman Marcus by Hudson’s Bay Co. for $2.65 billion, aiming to rival European luxury giants, underscores this shifting landscape.
Despite initial reluctance, Arnault now sees immense value in the sponsorship. LVMH’s extensive involvement in the games covers designing medals, dressing athletes, and providing champagne at VIP events. Dior’s role in the opening ceremony, although not fully disclosed, adds another layer of intrigue. Analysts at Bernstein describe the scale of this investment as “flabbergasting.”
This level of brand visibility is vital. Although expected to generate nearly €90 billion in sales—a significant rise from €54 billion in 2019—LVMH is not immune to the sector’s slowdown. Spending from Chinese VIPs remains robust, but their middle class faces a property slump. The US also sees a dichotomy: the super-wealthy continue splurging, yet the financially comfortable feel constrained by high borrowing costs and inflation. The anticipated luxury market rebound now seems postponed until 2025. Consequently, LVMH shares have almost wiped out their yearly gains.
The Olympics’ impact might further delay recovery, with travel restrictions and high-spenders possibly opting for Milan instead of Paris. Nevertheless, this short-term inconvenience promises long-term benefits. LVMH’s brands will reach a global audience, positioning them for future sales even if not immediately. The iconic Louis Vuitton trays for medal presentations will leave lasting impressions on viewers worldwide.
Arnault’s vision extends beyond luxury goods. He positions Louis Vuitton not just as a fashion label but as a cultural entity. CEO Pietro Beccari echoed this, asserting almost every household has contact with Louis Vuitton products, thanks partly to collaborations with the late Virgil Abloh and Pharrell Williams, connecting the brand to broader music and streetwear cultures. The Olympics ties it with sports.
Additionally, Arnault’s strategy taps into hospitality. As Chinese tourists return to Europe, they will not only don LVMH’s clothes but also indulge in its ecosystem of hotels and restaurants. Recent acquisitions like Chez l’Ami Louis and potential bids for properties like Venice’s Hotel Bauer highlight this ambition.
Yet, this grand sponsorship must be flawless. France’s political landscape and potential regulatory changes loom large. Furthermore, US competition authorities scrutinizing luxury market mergers could impact LVMH’s acquisitions. Consumer backlash over high prices and alleged poor working conditions in factories producing Dior bags could also pose risks.
Nevertheless, Arnault has proven savvy in investments, seen in the profitable acquisition of Tiffany & Co. His aim for a similarly fruitful outcome from the Olympics seems within reach. Victory is not just about medals, but about cementing LVMH as a titan in both luxury and cultural spheres.
