PARIS — Likening the fashion business to Formula One racing, Bernard Arnault says having a fast car is no guarantee of getting to the finish line first.
"You need a driver who can take all the twists and turns — and at high speeds. It's not all that easy," the luxury kingpin told a meeting Thursday of shareholders of LVMH Moët Hennessy Louis Vuitton.
Arnault was explaining why many of the group's brands have yet to reach "star" status, urging shareholders to be patient as LVMH seeks the right combination of management and creativity for such "works in progress" as Donna Karan, Celine and Givenchy. "There's no point throwing money at a brand unless we have the right combination, the right mix," he said.
Sounding relaxed and upbeat, Arnault voiced confidence for the high-flying luxury sector, boasting, for example, that 1,000 euro ($1,348 at current exchange) bottles of Chateau d'Yquem wines sell within minutes "and we're running out of them."
"The prospect for the year is pretty good," he told a packed audience at the Carrousel du Louvre. "It's a positive and stable economic period we are enjoying."
As reported, first-quarter sales at LVMH jumped 7 percent, to 3.8 billion euros, or $5.03 billion, from 3.56 billion euros, or $4.27 billion. Stripping out the impact of exchange rates, the increase stood at 13 percent.
At the meeting, Arnault acknowledged currency fluctuations remain the chief bugbear for the luxury sector and held out hope the European Central Bank would consider the long-term impact of a strong euro. In the meantime, he said LVMH would employ currency hedging and leverage its pricing power to compensate for sales in dollars and yen. "We're lucky enough to be in a business where we can increase prices over time," he said.
Arnault also trumpeted growing appetites for the finer things in emerging markets and expressed confidence in strong economic growth around the world, peppering his talk with the word "remarkable" to describe the sales and profit performance of the group's various companies.
"India itself is now coming into the fold with significant development," Arnault said. He added that Chinese sales were up 40 percent last year: "That indicates there is a tremendously great potential in the medium-term in that country."
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