Gucci's 'Diana' handbag secret
Kering admission cuts EU fine by millions, how Putin's friends stay airborne on Western private jets and Arnault’s ‘tragicomedy’ succession story
In this week’s newsletter:
Bernard Arnault makes all his big decisions at Christmas…
…and the book that won’t be on his gift list
The little secret which might have saved Gucci €120 million
Putin’s circle keeps flying Western private jets despite sanctions
Alleged drug dealers stamp drug packages with giant Rolex logo
Arnault family’s ‘tragicomedy’ succession story
La Lettre is running an excellent series of stories about how billionaire LVMH CEO Bernard Arnault dangles his inheritance in front of his children, with a “treat ‘em mean keep ‘em keen” approach that plays out at company meetings and in the press.
The series is only on its second part of five, but it’s already full of juicy details, like the fact that Alexandre, Fréd, Delphine and Jean only found out with two hours’ notice that they would be appearing at April’s “children’s talent show” annual general meeting. Dad told them to get on stage after Alexandre reportedly complained over breakfast that Antoine, who was the only one scheduled to appear, was getting all the glory.
“BA”, as insiders have nicknamed him, also reportedly announced Delphine Arnault’s appointment as head of Dior between courses at a family Christmas dinner in 2022, prompting an acidic and misogynistic question from BA’s wife Hélène. Hélène reportedly has some major beef with Delphine’s husband Xavier Niel, who she calls “El diablo”.
The piece quotes LVMH fashion division chief Pietro Beccari, who the publication reports told a friend a few years ago that his boss like to be “tough when things are going well and like to inject optimism when things are going badly”.
The threat to the kids underlying all this drama is that the boss may pick someone from outside to succeed him, instead of his children. “Arnault may be wondering whether a dynastic succession is the right choice, or whether someone from outside the family would be better placed to run the show”, the piece says, and Beccari is a key character in that. He reportedly nearly quit this year after Alexandre and Frédéric didn’t back his bonus package.
The series brings this real-life Succession story to life, with 77-year-old Arnault senior apparently content to let the drama run… and run… and run… (La Lettre (part one) / La Lettre (part two))
The book that won’t be on BA’s Christmas list
Bernard Arnault is the subject of a critical biography by French historian Audrey Millet, titled “Bernard Arnault, son univers impitoyable”. In English, that’s “His ruthless world”. It’s published by La Tribu, which is part owned by François-Henri Pinault, chairman of rival luxury group Kering.
The opening prologue describes Arnault’s attendance at Trump’s inauguration along with his daughter Delphine, among other tech industry titans.. “Emmanuel Macron, however, was not invited”, Millet writes. (Fashion Network)
Luxury tries to get its Chinese cachet back
France 24 has a useful survey of where the global luxury sector stands after two years of contraction, looking at how brands are going back-to-basics, selling poor performing brands and rethinking their China strategies to try and recover after the pandemic boom times. A sales rebound in China reported by Bloomberg “helped in part by an equities rally” offers some comfort. (France 24 / Bloomberg)
Gucci’s ‘Diana’ handbag price-fixing secret
Kering’s Gucci cut a multi-million euro Brussels price-fixing fine in half after the company volunteered another breach of the rules related to its popular “Diana” handbag, Noëmie Leclercq reports in Glitz Paris.
In April 2023, the European Commission raided Gucci’s Italian premises, finding evidence that the company had dictated prices, discounts and sales dates that its supposedly independent retailers could set, a breach of EU competition rules. (The reasons for the raid are not disclosed, other than to say it was an “unannounced inspection”. If you know more, drop us a line.)
The Commission was all set to fine the company for this infraction, until, in settlement talks, Gucci admitted it was doing something dodgy with the Diana too.
For the last six months of 2021, Gucci admitted that it had told retailers to stop selling its “Diana” handbag online, telling would-be purchasers they needed to visit a physical store instead, and workers at the company monitored the websites of retailers and rang them up to tell them off if they didn’t comply. The company disclosed all this to the Commission and it credited the company with a 50 per cent reduction, resulting in an eventual fine of €119.7 million, implying it would have been close to €240 million without it.
This case says a lot about oddness of the European Commission’s rules (if you do twice the crime, pay half the fine?), and also that Gucci reportedly had another incident in its back pocket. What else is it hiding? (Glitz Paris)
In case you missed it from last week, Kering was featured in this comprehensive academic review of legally mandated disclosures of supply chain risks at luxury firms. The researchers found it mostly amounted to a “box-ticking exercise”.
Luxury’s harmful secrets
We’ve gone line by line through an extremely detailed and highly critical academic paper which reveals how five luxury firms (LVMH, Kering, L’Oréal Luxe, Hermès and Christian …
Kering delays layoffs after strikes
Italian unions have secured a deal to delay planned redundancies at Alexander McQueen following strike action in May, buying workers and the new chief executive Gianfranco D'Attis, former chief executive of Prada, a bit of time. (Nss / Reuters)
Prada family redirects dividends toward moon missions and bitcoin
The Prada family, which controls 80 per cent of the eponymous firm, is deploying its €330 million dividend payout into ventures including moon missions and bitcoin investments. Given where luxury valuations have been over the past two years, they’re probably wise. (Glitz Paris)
Saks Global wins court approval to shed 75 per cent of its debt
A US bankruptcy court has approved Saks Global’s restructuring plan which will eliminate roughly three-quarters of the group’s debt and shrink its retail estate to 49 stores operating under the Neiman Marcus, Saks Fifth Avenue and Bergdorf Goodman nameplates. For European luxury brands, the restructuring settles the uncertainty around one of their most important American wholesale partners. (Reuters / Saks Global)
A who’s who of Saks’s creditors included $700 million of unsecured claims from luxury brands Chanel, Kering and others, including $24.47 million owed to Brunello Cucinelli. (Reuters)
We are fascinated by what’s going on at BC, as is LVMH short-seller Intern Pierre. Catch up with our article earlier this month:
Putin’s circle keeps flying Western private jets despite sanctions
Close allies of Russian President Vladimir Putin continue to travel internationally on Western-manufactured private jets such as the Bombardier Global 7500 and the Gulfstream G650 pictured above, according to the Wall Street Journal, once again exposing the gap between sanctions designed to immobilise Russian elites and its actual enforcement. The findings raise questions about the legal responsibility of aircraft manufacturers and brokers who buy and sell the planes, the maintenance firms that keep them airworthy and the jurisdictions that permit them to land. “Russian oligarchs typically get access to Western-made private jets through brokers and intermediary companies”, writes reporter Bojan Pancevski. (WSJ)
BYD is coming for the West’s car industry
A raft of interesting headlines from this Daniel Craig-endorsed carmaker which is gunning for everyone from VW to Rolls-Royce:
BYD predicts 80 per cent of China car sales will soon be electric. (CNBC)
BYD to spend €2bn to build out 5-minute flash chargers in Europe. (FT)
China’s BYD aims to be world’s biggest car firm within five years. (Guardian)
And one about German carmakers:
German carmakers weigh China, defence tie-ups for idle plants (France24)
US tech company CEOs, won’t you buy this Ferrari?
It’s no accident that the Ferrari Luce’s first public outing outside Italy was on the streets of San Francisco, since the sales philosophy seems to be targeting formerly-Prius loving tech execs. (Jason Cammisa on Instagram)
And finally, do you know your customer?
The little corner of the newsletter where we look at links between luxury goods and international organised crime.
Vietnam counterfeit raids net fake Hermès and Gucci bags
Police in Can Tho, Vietnam, dismantled two workshops manufacturing counterfeit goods bearing the trademarks of Gucci, Hermès, Louis Vuitton, Dior, Burberry and Versace, seizing more than 4,200 items. The raids caught workers in the act of production, and found that, “to avoid detection, each worker was assigned only a single step of the manufacturing process”. (Tuổi Trẻ / DTiNews)
Rolexes, Range Rovers and YSL handbags central to NI drug case
Ten people face drug and criminal property charges in Northern Ireland after police seized luxury watches, designer handbags and high-end cars including Range Rovers, a BMW, an Audi RS6, Rolex and Breitling watches, designer clothes and Yves Saint Laurent handbags. The case, in our view, is another example of the risks for businesses involved in the secondary market for luxury goods.
Nicole Martha Lavery, 31, is accused of possessing a Range Rover, a Rolex and Yves Saint Laurent handbags as criminal property. The alleged head of the group, sunbed-shop owner Steven ‘Saucy’ Brown, 37, is accused of possessing criminal property including a Range Rover, and was linked in court to a £700,000 Spanish villa. (Sunday Life)
Alleged drug dealers stamped package with Rolex logo
“Three people were arrested last week for their alleged involvement in a local drug trafficking organisation responsible for distributing fentanyl and cocaine in northeast Indiana.” They were selling drugs in packages stamped with the Rolex logo, seen below. (Wane)
Want more? Read these Dark Luxury hit stories
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