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Michael Burke Named CEO of Louis Vuitton

Jordi Constans steps down from role for medical reasons.

PARIS — One of Bernard Arnault’s most trusted and accomplished deputies is in the driver’s seat at Louis Vuitton.

On Tuesday, Vuitton said Michael Burke, chief executive officer of Bulgari, would succeed Jordi Constans, who is stepping down as Vuitton’s chairman and ceo for medical reasons.

Constans, had officially taken over the management helm of the luxury goods powerhouse only last month, after shadowing longtime Vuitton honcho Yves Carcelle since September 2011.

According to sources, Constans’ medical condition is not life-threatening, but prohibits him from meeting the physical demands of the high-profile job.

Overseeing Vuitton’s more than 480 boutiques requires almost constant travel — plus the pressure of piloting a company that delivers the lion’s share of profits for luxury group LVMH Moët Hennessy Louis Vuitton. LVMH is the parent of some 60 brands spanning fashion and leather goods, perfumes and cosmetics, wines and spirits, retail and jewelry, including Givenchy, Sephora, Dom Perignon, Chaumet and Guerlain.

“We wish Jordi all the best,” Antoine Arnault, a member of the board of LVMH, told WWD. “It’s all very sudden, and it’s been a very moving moment for us.”

“During his time with Louis Vuitton, Jordi Constans has shown remarkable leadership, which has earned him the respect of the entire team,” Bernard Arnault said in a statement. “He understood perfectly the opportunities for this iconic brand. On behalf of the entire group I wish Jordi a full recovery.”

Tuesday’s development was an unexpected denouement to a pivotal management transition. Carcelle, one of the industry’s most admired executives, piloted Vuitton’s global expansion for more than 20 years, forming a close bond with artistic director Marc Jacobs and leading the brand into product categories such as ready-to-wear, footwear, fine jewelry and eyewear.

Recently, Vuitton has taken steps into broader lifestyle categories, launching expanded ranges of writing instruments and stationery — and its first home objects line, unveiled during the Design Miami fair earlier this month. The brand is also working on a range of fragrances with nose Jacques Cavallier.

Carcelle is to become vice chairman of the Louis Vuitton Foundation, a Frank Gehry-designed art museum slated to open next year on the fringes of Paris, as reported. He’s also to remain on LVMH’s luxury committee and undertake “strategic missions” alongside Arnault.

Carcelle, a driven and indefatigable executive, traveled the world to scout, open and manage boutiques in such far-flung locations as Mongolia. Dead serious in business, Carcelle is known as a bon vivant in his off hours. His hobbies include sailing and making his own wine and olive oil.

Constans joined Vuitton in September 2011. The Spanish national had formerly been executive vice president of Danone SA’s fresh dairy products division and a member of its executive committee. A graduate of business and economics from Barcelona’s Central University, he joined Danone in 1990 and held various positions in marketing and sales before becoming general manager for Spain in 2002 and France in 2004.

A calm, affable executive, Constans had gradually taken on more responsibilities at Vuitton, but kept a low public and media profile, preferring to leave the spotlight to Jacobs and Vuitton’s latest leather goods and accessories campaigns. The latest ad push is a dreamy, travel-themed spot for print, cinema and television featuring model Arizona Muse roaming the Louvre museum in Paris before escaping in a striped hot air balloon.

The management change marks a return to Vuitton for Burke, a charismatic executive who headed its North American business in the Nineties.

Burke takes the helm at a time of slower growth for the luxury sector, and at a company now under intense scrutiny from the financial community, which is eager to see Vuitton continue its double-digit growth.

“Evidence of a broad-based luxury demand slowdown in 2012, partly due to continued softness in China…, early signs of normalization in the U.S. and weak demand from local European clientele (albeit offset by inbound tourist demand) does not necessarily bode well for luxury companies near term. But at plus-6 percent, LVMH’s [third-quarter] revenue performance was satisfactory, and management expressed a good degree of confidence for the remainder of the year,” said Thomas Chauvet, European luxury goods analyst at Citi Research in a note on Tuesday. “The longer-term drivers of LVMH’s growth (favorable demographics, retail expansion, pricing power, focus on quality and innovation) remain unchanged, in our view.”

Citi expects LVMH’s revenues, earnings before interest and taxes and earnings per share each to grow 12 percent between 2011 and 2014.

Among Burke’s first orders of business will be to build his marketing and communications teams following the February exit of Pietro Beccari, Vuitton’s executive vice president, who went on to succeed Burke at the management helm of Fendi.

On Tuesday, shares of LVMH rose 0.7 percent to 138.05 euros, or $182.64 at current exchange, on the Paris Bourse.

A key protégé of Arnault’s, Burke started his career with the French business titan in 1980, working at various Arnault holdings before joining Christian Dior in the U.S. in 1986.

“I have worked with Michael Burke for many years. He has enormous experience in our business and knows Louis Vuitton well,” stated Arnault. “He is a seasoned leader with a well-rounded profile, pragmatic, multicultural and modern. He has excellent skills in motivating his teams. I am convinced that he is the right leader for Louis Vuitton’s future; he will build on the initiatives launched by Jordi Constans, bringing the vision and drive to continue advancing Louis Vuitton’s leadership position in luxury.”

Burke was president and ceo of Louis Vuitton North America from 1993 until 1997, where he oversaw the construction of the LVMH building in New York on 57th Street. Burke then returned to Paris as Dior’s executive vice president and was named managing director, the number-two position at Dior, in March 1998. He next became worldwide managing director of Christian Dior Couture.

In 2003, the brainy and articulate executive was named to the management helm of Fendi, where he proved able to immerse himself deeply into the culture of a brand and build strong business pillars. He put furs and leather goods at the center of Fendi’s development; created a palazzo in Rome to exalt the brand and its two creative engines, Karl Lagerfeld and Silvia Fendi; raised the bar with event marketing with spectacles such as a 2007 fashion show on the Great Wall of China, and put craftsmanship back on the consumer agenda through in-store demonstrations and an ongoing link with industrial designers.

At Fendi, he led a turnaround effort to build an integrated distribution model for its fashions, furs and leather goods businesses. Burke helped transform a family-owned enterprise with complicated dynamics into a taut and professionally run luxury player with high profitability.

Burke joined Bulgari in February after LVMH took control of the Italian jeweler in a cash-and-share swap valued at more than $6 billion, succeeding the company’s former ceo, Francesco Trapani. Burke’s impact on Bulgari was first seen in September, when the company returned to the Biennale des Antiquaires exhibition in Paris, where the brand presented 100 styles on bold white porcelain sculptures.

In November, Burke mapped out to WWD the first steps of his strategy for Bulgari during an event in Rome, when the firm revealed it was donating $20 million to Save the Children. While stressing the strength of the Bulgari brand, Burke touted the power of LVMH behind the company, which will allow it to be “more forward-looking and risk-taking.”

He pointed to significant investments in creativity, stores and designs. Since his arrival, the executive has helped accelerate the development of the watch division, which he considered “way below potential.” Burke had been reining back the expansion of the company’s leather goods division to focus on watches and jewelry, and said he was “pushing the watch business with premium distribution” in the U.S., for example. He tapped architect Peter Marino to develop a new store concept as Burke explored new markets for Bulgari, such as Brazil and Turkey.

The most comprehensive results of Burke’s influence on the brand are expected to hit the Baselworld watch and jewelry fair in April.

His successor at Bulgari has yet to be named.