I was surprised to see Bernard Arnault as the richest man in the world, above Jeff Bezos, Elon Musk, and Bill Gates. He owns an empire of fashion and jewelry brands like LV, Givenchy, Tiffany Co. etc. as well as luxury booze companies like Moet and Hennesey.
How are fashion and jewelry businesses worth more than tech and innovation in the year 2021?
Are there really masses out there spending all there disposable income on 500 dollar t shirts and 6 thousand dollar bags? Flexing on Instagram and popping bottles in the club. I’ve seen the type on Instagram, but I thought surely they must be a minority, and not large enough a market to top giants like Elon Musk and Amazon. I must be really out of the loop.
In: Economics
Amazon’s market cap is about $1.7T. Bezos owns about 11% of that.
Microsoft’s market cap is about $1.9T. Gates owns just over 1% of that.
Tesla’s market cap is about $590B. Musk owns about 20% of that.
LVMH’s market cap is $410B. Arnault owns about 46% of that.
So there’s a couple things going on here: First, Tesla isn’t worth nearly as much as you probably thought, because it hasn’t been hugely profitable, and investors assume that, as it competes with the likes of GM, Toyota, etc., it will never be dominant in its market the way Microsoft or Amazon are.
Second, Arnault owns a much larger share of his company, having taken on less investor money to get the company where it is. This is mostly due to the fact that the constituent companies have been around forever by comparison to the tech companies, so they could grow more organically.
Finally (or, related to point two), Bezos lost ~~half~~ a quarter of his shares in his divorce and Gates has sold off most of his shares over time.
Interestingly, if Gates would still own the same percentage of Microsoft as he did in 1986, he’s be worth just shy of a trillion dollars.
He owns/operates quite a bit more than fashion brands:
*Arnault is a familiar name to many fashion obsessives, as LVMH owns many exalted brands in the industry, including Christian Dior, Celine, Givenchy, Loewe, Fendi, Bulgari, Tiffany & Co., Sephora, and Fenty, briefly, in addition to the aforementioned Louis Vuitton and Moët Hennessy. The company also controls several wine and spirits brands (including Veuve Clicquot, Chandon, and Belvedere) as well as the luxury yacht company and the high-end hotel brands Cheval Blanc and Belmond.*
Luxury yacht company? CHECK
High-end hotel chain? CHECK
Booze companies? CHECK
Because there are plenty of rich people to support the industry?
Also, you might not be at that stage of life yet, but a well fitted wool sports coat is quite comfortable in the cooler weathers. A custom tailored suit is incredibly comfortable. Once your career gets going, it’s not inconceivable to get a few sports coats. I usually wear them to the office even though we’re not that strict on attire.
There really are people with that much disposable income. There’s a good statistic that will probably shock you. In an interview, CEO of Hublot and Swiss watch industry legend, Jean Claude Biver said, “A person buying a $5000-$10000 watch usually waits 10 years to buy another one that expensive. But for someone that spends $100,000 on a watch, the gap is only 6 months to get another one.”
You’d probably discover with a little more research on both industries that it really isn’t; regardless LVMH doubles as high end consumer retail brands, which are high volume. Credit cards and personal budget reallocations make any purchase possible
LVMH controls a huge amount of disposable incomes of people who don’t care about giant markup. That makes for killer margins.
Latest Answers