World’s richest man Bernard Arnault, CEO of luxury conglomerate LVMH, just keeps adding his children to the company board, harkening back to the moves of media titan Logan Roy in HBO’s sensation Succession. Alexandre Arnault, 31, and Frederic Arnault, 29, are the latest of the patriarch’s children to join the company’s dynastic lineup, after shareholders approved their nominations on Thursday.
They join the ranks of their other three siblings in expanding control in LVMH’s empire—including the fresh-faced Jean Arnault, the head of Louis Vuitton’s watch division who was born in 1998.
The Arnault family carries with it a certain luster: They have monthly lunches at LVMH’s Paris headquarters to talk about the future of the family business. Bernard Arnault, who is worth $218 billion, has famously boasted that his children have to earn their place in the company. Apparently, all of his offspring are already deserving of their roles, which include Frederic Arnault helming LVMH’s entire watch division, and Alexandre Arnault holding the president of Rimowa.
LVMH’s efforts to keep the business in family hands comes amid a tumultuous time for the luxury industry. But despite industry-wide hardships, LVMH has been resilient, reporting last week that first-quarter sales grew 3% on an organic basis to $22 billion, matching estimates. The company is valued at $430 billion.
LVMH and Louis Vuitton did not respond to Fortune’s request for comment.
Kid prodigy or nepo baby?
Jean Arnault, though he does not hold a position on the company’s board, has been involved in the family business since 2017, when he was a Louis Vuitton sales associate. After stints at McLaren Racing and Morgan Stanley—as well as a master’s degree from MIT in financial mathematics—the youngest LVMH scion returned to the company as the director of marketing and development for the watches division in August 2021, before taking the helm about a year later.
Created 20 years ago, Louis Vuitton’s watch division was meant to change the narrative of watch collectors not taking luxury jewelry brands seriously. Though Louis Vuitton originally sold more affordable luxury watches in larger volumes, Jean Arnault has made significant changes to the brand’s business model in his short tenure, including limiting the Louis Vuitton stores that stock watches as well as retiring a number of watches from the brand’s collection. Last year he relaunched the brand’s Tambour line and crafted just one watch in the model made of the rare metal tantalum. In October, the brand made 10 watches in collaboration with Rexhep Rexhepi with an eye-popping price tag of $497,000.
Arnault’s changes mean that a Louis Vuitton watch will cost $20,000 on average, a fivefold hike from today. These choices differentiate it from LVMH’s other watch brands, including legacy brands TAG Heuer, Hublot, and Zenith, and represent a focus on profound craftsmanship and exclusivity above all else—even profit.
“We’re not going to make a ton of money with this,” Arnault told the Wall Street Journal. “It’s not going to be highly profitable at all, but it’s really about making sure that we switch the message completely.”
Gen Z doesn’t dig luxury
Despite tapping a 20-something to run its watch division, Louis Vuitton’s ambition for its watch division has not yet struck a chord with the Gen Z demographic Arnault fits into. LVMH may be weathering the luxury slowdown storm as a whole, but its watches and jewelry division reported a 5% dip in first-quarter revenue to $2.6 million.
Gen Z consumers have largely turned away from luxury goods, due to their disinterest in prestige and status in favor of sustainability. Others fear that the economy will force them to cut back on discretionary spending.
“If a recession happens, then I will 100% buy less or maybe even stop buying altogether,” luxury lifestyle influencer Jeffrey Huang, 28, told Reuters.
The stakes run higher for luxury brands to appeal to this picky audience, as Gen Z is predicted to account for 70% of the luxury market by 2025, according to Bain & Company.
Growing a young consumer base
However, there is a pocket of young people who share the old guard’s interest in watches. Though the vast majority of Gen Z may not be status-obsessed, social media has proliferated information about collector watches and spawned aesthetic-centric trends in “mob wives”—derived from The Sopranos, where antihero Tony Soprano’s wife Carmela is often seen with gold-clad wrists.
“Today, we see a younger and younger demographic that is much more informed than their counterparts used to be,” watch collector Anish Bhatt told Fortune in February. “They’re much more knowledgeable, they understand the value of watches, [and] they also understand the status that it gives them.”
LVMH has tried to grow its Gen Z audience beyond the niche watch collectors. In 2021 it took over a 60% stake in Off-White LLC, the trademark of designer Virgil Abloh—the artistic director of Louis Vuitton men’s and a beacon for Gen Z audiences who died later that year. A year later, LVMH and venture capital firm Antler gave Heat, a streetwear mystery box company beloved by Gen Z, $5 million in seed funding to expand its reach.
While the company experiments with capturing the attention of youth, Jean Arnault is keeping with a philosophy as traditional and conservative as the watch-collecting industry as a whole: Luxury watches remain almost exclusively for the ultrawealthy.
Whether Arnault’s vision aligns with the direction of the conglomerate and resonates with consumers remains to be seen. But like in the iconic television show the Arnault family resembles, there’s risk that even the prestigious family name won’t guarantee Jean Arnault’s ascendance.
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