THE INTERNAUTE FLIES HIGH
PARIS — Bernard Arnault dove into the Internet with a zeal his close friends and colleagues claim they haven’t seen since he launched Christian Lacroix in 1987.
“What is really original about Mr. Arnault’s approach to the Internet is that he is building something from scratch,” says Olivier Beauvillain, an analyst covering French and pan-European online content and commerce for Jupiter Communications.
Last summer, Arnault announced a joint venture with Kingfisher PLC to create Libertysurf, an online free-access service provider that now has 700,000 subscribers, and recently took control of the French search engine Nomade. He also created a $500 million fund called Europ@web for internet startup investments.
“I think the growth will be phenomenal,” Arnault said. “You will have an increase of the market that will be really like what you had in the mobile phone. This is really a revolution.”
His fund, which is part of his family holding Groupe Arnault and not LVMH, has been compared with billionaire Masayoshi Son’s Softbank or the CMGI fund run out of Boston by Web financier David Wetherell. So far, Europ@web has acquired majority control of Aucland.com, a French online auctioneer, and minority stakes in the auction sites icollector.com and QXL.com. “Mr. Arnault has pan-European aspirations but he must move very quickly, especially in the U.K. and Germany, where there are already competitors and there will be space for only a few players,” said Beauvillain.
Analysts are looking for a Europ@web initial public offering next year, but say it’s too early to speculate on a value for the firm.
“We expect a synergy between LVMH and Europ@web, but right now the strategy is unclear,” said Beauvillain. LVMH recently launched Sephora online, and a revamped Dior site just went up, too. Arnault hinted earlier this year that he’s considering taking Sephora.com public. Now there’s talk of creating a wide-ranging luxury portal to be called iluxury.com, which might eventually include non-LVMH brands.
Beauvillain said he regarded many of the U.S. investments by Europ@web as “a way to keep an eye on the more highly developed American market and as purely financial.” They include minority stakes in pet site petopia.com, the online brokerage Datek, the online pharmacy planetrx.com, the music site mp3.com, 1-800-flowers.com and the online grocery service webvan.com.
Europ@web also has a stake in the new Swedish online sportswear retailer boo.com.
While many luxury companies fear the Internet as a force that drives down prices and fails to present expensive goods adequately, Arnault remains open-minded. “The first day we opened sephora.com, we had more than one million hits, which is incredible,” he said. “Who would have thought even as recently as two years ago that one day you would buy perfume or lipstick through the computer? It’s working now, so I think it’s going to expand to other areas and products.”