PARIS — Meet Bernard Arnault, the world’s most overqualified watch salesman.
Addressing shareholders at LVMH Moët Hennessy Louis Vuitton’s annual general meeting here Thursday, the luxury giant’s chairman and chief executive officer flashed his Tag Heuer Connected model, developed in conjunction with Intel Corp. and Google and released last November.
Holding out his wrist, he boasted how it is outselling other, more hyped smartwatches — hint: the Apple iWatch, although he didn’t name names.
“What’s more, it actually looks like a watch,” he said, eliciting a round of chuckles from the hundreds gathered at the Carrousel du Louvre.
His pitch for Tag’s $1,500 timepiece — cited as an example of the group’s commitment to innovation — prompted additional queries about its functions, which France’s richest man gamely fielded, explaining how it is essentially an extension of his mobile phone, allowing him to discreetly glance at incoming messages, stock prices and other information. The importance of the product was exhibited by Arnault’s turning out for its worldwide launch in New York last November, where he beamed at the news that customers were already lining up at the Tag store down the street to buy it.
“You can also load your music on to it, and if you jog, you can run without carrying your telephone and listen to your music using Bluetooth-enabled headphones,” said Arnault in his sales spiel for the watch on Thursday, adding that the device also monitors vital functions like heart rate. “And the new version will be even stronger.”
In a lively, upbeat address, Arnault trumpeted the resilience of the family-controlled luxury group, characterizing its solid performance in 2015 as a logical consequence of its commitment to creating desirable, high-quality products loaded with “practical creativity.”
To wit: He divulged that Louis Vuitton would this summer introduce a new and “very innovative” suitcase “made with all the savoir faire of this maison.”
According to market sources, Marc Newson collaborated with Vuitton on the new travel item. The celebrated industrial designer created a backpack for the brand in 2014 as it marked its 160th anniversary with a series of pricey one-offs in its monogrammed canvas.
During the meeting, Arnault also broke his silence about a controversial and popular “Roger & Me”-style French documentary currently in theaters. Titled “Merci Patron,” or “Thanks, Boss,” in English, the film chronicles the struggles of a couple who lose their jobs at a Kenzo suit factory when production is moved to Eastern Europe. The filmmaker and journalist François Ruffin takes Arnault to task for their plight — despite the fact that the French group hired 27,000 people last year.
“Listen, it’s hard to give my opinion on the film, as I haven’t seen it,” Arnault mused before a rapt room. “But we’ve been the target of criticism from far-left parties for more than 20 years. It’s quite surprising; I’ve often wondered why. I think the answer is quite simple: The LVMH Group is the incarnation of — at least for these far-left observers — the worst that a liberal economy has produced.
“We have all the flaws. First, we are a big CAC 40 company — that’s very detrimental. On top of it, we have good results and that makes it worse. Thirdly, we hire staff — in France even, and long-term — and that’s appalling. When I first arrived at the head of this group, we had 20,000 employees and today we are at 120,000. That’s very bad, according to them. And, lastly, we illustrate globalization’s benefits for France, that’s the absolute catastrophe…and so that is the reason why, in my opinion, we have been the subject of this kind of criticism,” Arnault concluded dryly, rewarded with a burst of applause.
Flanked by giant images of Hollywood stars Johnny Depp and Alicia Vikander — the faces of Dior’s Sauvage fragrance and Louis Vuitton’s fashions, respectively — Arnault trumpeted how his group’s “unique and diversified” portfolio of brands — spanning liquors, beauty products, leather goods and even hotels — has proven a “considerable advantage” over rival luxury firms and given it stability against a volatile economic and geopolitical backdrop.
He touted Fendi’s revamped Rome flagship, set in a five-story palazzo with a boutique hotel and rooftop Zuma restaurant, as the most-visited store in the Eternal City; lauded the talent of 30-year-old Jonathan Anderson, creative director of Loewe and “a revelation among the new wave of designers,” and waxed poetic about the raw materials employed by Loro Piana, acquired by the group in 2013 for 1.99 billion euros.
“Quality is at the center of our preoccupations. It explains the success of our products,” he said, reprising a common theme of his annual address: “We are not a marketing-driven company.”
At the meeting, chief financial officer Jean-Jacques Guiony reviewed LVMH’s 2015 results, touting record revenue, cash flow and operating profits.
There was no mention — and no questions from the floor — about LVMH’s ho-hum results for the first quarter of 2016, when sales growth in the cash-cow fashion and leather goods division stalled due to discontinued collections at Donna Karan and Marc Jacobs, plus a steep decline in tourist flows to Paris in the wake of the terror attacks last November. Earlier in the week, Guiony said sales at Vuitton stores in the French capital had declined double-digits in the first three months of the year.
Yet Arnault was bullish on Vuitton’s legacy of leather goods savoir faire, and its reputation for made-in-France handbags. “Fashion at Louis Vuitton is an accessory,” he said.
He also let slip a few numbers, even though the group never breaks out the financial performance of individual brands.
Discussing Sephora, he boasted that the beauty chain would soon be the largest distributor of cosmetics in the U.S., whereas a decade ago, some luxury analysts and shareholders were calling for LVMH to dispose of the retailer.
“It develops, including online, with great success and the turnover is very important, between 500 million and one billion [euros], with excellent profitability, which is rare on the Internet,” he said.
Discussing Dior’s Sauvage, which he hailed as the number-one men’s scent in many markets, he asserted that Dior is “the most famous French name in the world” and that its fashion and fragrance businesses are now in the range of five billion euros, or $5.63 billion at current exchange.
The executive also highlighted the importance of digital innovation going forward, telegraphed this week when LVMH revealed it is a principle sponsor of Viva Technology Paris, a new trade event this summer that will spotlight 5,000 start-ups.
“We have high hopes — and in any case a strong will — for the digital orientation of the group,” Arnault said, trumpeting the recruitment last year of Ian Rogers from Apple to become LVMH’s first chief digital officer. “Digital is integral to the innovation that is increasingly driving companies around the world.”
He stopped short of saying sales associates would be replaced by robots, something a shareholder suggested during the question-and-answer period.
“I think that would disappoint our clientele. Human contact is absolutely fundamental to explain the quality, creativity and reliability of our products,” he said, characterizing digital technology as a service enhancement. “So the digital development potential for a group like ours is very important — and this without affecting the attractiveness of the product.”