A week after Calvin Klein announced that he had hired Lazard
Frères & Company to help him consider the sale of his company, Bernard
Arnault, the man deemed the most likely buyer, was in Manhattan to conduct a
little business of his own.
Mr. Arnault, the chairman of luxury giant LVMH-Moët Hennessy
Louis Vuitton, was here to celebrate the Oct. 13 opening of the Sephora flagship store at Rockefeller
Center, yet another beachhead in his invasion of New York.
Flanked by three beefy bodyguards, his wife, Helene Mercier
Arnault, and his pet designer, John Galliano, he stood inside the store near a
display rack of CKOne, the Calvin Klein fragrance, and greeted his guests.
There were a lot of them, and as they squeezed past, a few couldn’t help but
bump the stand of CKOne. Bottle after bottle fell to the floor. The bottles
broke, and the soapy androgynous smell of Mr. Klein’s mass fragrance filled the
air. Mr. Arnault didn’t even wince.
But he pursed his lips when asked whether he might like to buy
Calvin Klein. “It’s a great brand,” he said. Had he met Mr. Klein? “No,” he
said. “Not yet.”
Not yet. But Mr. Arnault will certainly be among the first to get
a look at the Calvin Klein book that Lazard will distribute to potential
bidders. (Mr. Arnault goes back a ways with Lazard. His earliest backer was
Antoine Bernheim, a senior managing partner.) The LVMH chairman comes to mind
first, not only because of his aggressively acquisitive style and his deep war
chest, but because he has recently been snapping up American companies to
complement his vast European holdings in fashion and luxury retail. In the last
seven months, this wiry, calculating conglomerateur
from France has been infiltrating the closets, Palm Pilots and conversation of
Manhattan’s fashion cliques as a succession of small but well-regarded American
brand names have been absorbed by the LVMH juggernaut. Now suddenly, Monsieur Bernard,
he is everywhere, but people don’t quite know what to make of him.
On Dec. 8, Mr. Arnault will unveil his new New York base of
operations: a new 23-story, $40 million-plus glass-and-steel building on 57th
Street and Madison Avenue. It will house a Louis Vuitton flagship, a Christian
Dior boutique, a new Bliss Spa and headquarters for LVMH’s executives in the
United States. “It’s a very important retail space,” said Faith Hope Consolo of
store leasing specialists Garrick-Aug Worldwide. “It’s a presence almost equal
to Tiffany’s or Bergdorf’s.”
At the top of the building, designed by Pritzker Prize winner
Christian de Portzamparc, is a large glass-enclosed room, the nerve center for
Mr. Arnault’s Manhattan campaign. “The Magic Room!” Mr. Arnault said proudly.
“The Magic Room!” echoed Mr. Portzamparc. On Dec. 8, before le tout New York, Mr. Arnault will host
a Municipal Art Society gala in the Magic Room. All Galliano’s ladies (Nan
Kempner and friends) will be there, as will all of Michael Kors’ and Marc
Jacobs’ (Miller sisters, Vogue
editors, and plenty of girls who, for whatever reason, aspire to be like them).
As they drink the company champagne, and look through the windows across 57th
Street and down Madison Avenue, toward the streets of SoHo, they will come to
realize that-abracadabra!-they are Arnault’s ladies now, gazing out at
Mr. Arnault’s American fetish began three years ago when he
started hiring American designers to revitalize LVMH’s European fashion
houses-Marc Jacobs at Louis Vuitton, Michael Kors at Celine, and Narciso
Rodriguez at Loewe-overlooking French talents like Eric Bergère and Jean-Paul Gaultier.
He was bringing New York to Paris.
But then in April, when Mr. Arnault bought Bliss, the impossibly
popular SoHo spa, for an estimated $30 million, Paris came to New York. It was
the equivalent of an invading army’s seizing control of a nation’s communications
centers. Bliss had the right kind of customers: Nolita girls and young
socialites with clean faces, rather than Milanese matrons with bonded teeth,
streaked hair and yards of Hermès scarves. By starting out with Bliss, Mr.
Arnault was sending a dual signal: I am here, and I understand what you like.
In July 1998, Sephora, the cosmetics and beauty-supply retail
chain owned by LVMH, opened its first store in America, in SoHo. Then, on Oct.
13, he officially moved the chain’s flagship from the Champs-Élysées to Fifth
Avenue, when he opened the Rockefeller Center store. In the intervening months,
he had bought little American companies like Hard Candy and BeneFit Cosmetics,
as well as stakes in some larger European fashion labels: British shirtmaker
Thomas Pink, Swiss watchmaker Tag Heuer and Italian baguette-bag maker Fendi
(in a $900 million joint venture with Prada). With every move, he dug deeper
into the consciousness of fashion-savvy New Yorkers.
This is actually Mr. Arnault’s second attempt to make it in New
York. For three years during the early 80′s, he lived in upstate New Rochelle,
at a time when many French businessmen left France in the wake of the election
of its Socialist president, François Mitterrand. Back then, Mr. Arnault was a
real estate developer attempting to expand his family’s real estate business
into the United States. But, in 1984, he sold the family business (without
telling his father until after he’d done so), sold his house to neighbor John
Kluge (who tore it down) and returned to France to buy Broussac, a bankrupt
textiles company that owned Christian Dior. (Lazard Frères helped him finance
the purchase.) He sold off the parts, held onto Dior and used it as a launching
pad for his dreams of creating a giant luxury conglomerate.In 1988, again with
Lazard’s backing, he went after LVMH After a two year battle, he had sole
control of the company-and a reputation in France for overly aggressive
business tactics that seemed, well, American.
Now, after a decade of buying, the empire includes Louis Vuitton,
Loewe, Celine, Christian Dior, Givenchy, Kenzo, Fendi, Thomas Pink and Regina
Rubens; the luxury liquor companies Dom Pérignon, Moët & Chandon, Veuve
Clicquot, Krug and Pommery Champagnes, Hennessy and Hine cognacs, Château
d’Yquem wines. In beauty and cosmetics, LVMH owns Guerlain perfumes, Sephora
(which functions as something of a company store these days), Bliss, Benefit
and Hard Candy (as well as the cosmetics and perfume divisions of LVMH’s
fashion labels.) LVMH also controls Duty Free (wrangled from Robert Miller in
1996, in another bruising battle), which gives the company a convenient
distribution channel for its products.
Mr. Arnault recently started a $516 million Internet investment
group called Europweb, which has made investments in on-line fashion retailer
Boo.com and on-line pharmacy Rx.com (sure to carry LVMH cosmetics). Mr. Arnault
has also announced an interest in beefing up his luxury watch and jewelry
department. Hence his recent purchase of Tag Heuer and Fred, a Parisian
Almost as notable are a few of the companies Mr. Arnault does not
own. In his long, bloody, and ultimately unsuccessful bid for control of Gucci,
he was cast as the marauding villain, enemy to high fashion. When François
Pinault, the head of rival French luxury conglomerate
Pinault-Printemps-Redoute, came in as a white knight and acquired control of
Gucci, Mr. Arnault suffered his first major defeat. But it has not deterred him
from continuing his shopping spree.
When it comes to smaller companies, the way Mr. Arnault tends to
operate is this: he identifies a
cheap target with a hot name brand (Bliss Spa, Hard Candy, Thomas Pink), buys a
majority stake, then sets out to help them grow, without tinkering with them
creatively. “We’re good at the silly stuff,” said Bene-Fit co-founder Jean
Danielson. (Bene-Fit’s self-tanner is named Aruba in a Tuba.) “They’ll help us
expand internationally. Like Japan.”
In theory, at least, LVMH provides the money and reach. Take the
example of Bliss. Founder Marcia Kilgore will retain creative control-she’ll
write the copy for the punchy Bliss Out catalogue,
for example-and LVMH will concern itself with turning Bliss into a profitable
national business. “It’s not like she’s driving a hundred Lexuses now,”
explained Bliss spokesman Mara Stern. “It’s more like, instead of 20 hours a
day, we’re working a lazy 16. And all of these projects we’ve been wanting to
do, we can do them now.” These projects include a second spa (inside the new
LVMH building) and pitstop style manicure salons as common as Starbucks. Expect
the first in time for Christmas.
With people whose very names are the commodity, he’s made an
interesting tradeoff. Marc Jacobs, Michael Kors and John Galliano each took
over a major house (Vuitton, Celine and Dior respectively), and in exchange Mr.
Arnault finances their own labels. Marc Jacobs was desperately in need of a
backer when he took over at Vuitton. And Michael Kors, with Mr. Arnault’s help,
will open a mammoth store on high-rent upper Madison, right in the neighborhood
of his “preppy glamour” customers. Only Alexander McQueen, who is at the helm
at Givenchy, does not take money for his own, eponymous label.
”As a young designer,
[working for LVMH] seems absolutely to be the way to go,” said Bill Blass, the
New York designer. “It gives you an exposure that just being an American
“I like American designers,” Mr. Arnault said. “They are very
creative, but they also like to sell. They are very close to the consumer, and
they are not only interested in creating new products, but also in their
capacity to make them sell well. So you see for us it’s a very attractive
In fact, the only LVMH-owned house that is losing money is also
the only one with a Frenchman at the helm: Christian Lacroix.
With the older fashion labels, Mr. Arnault’s formula was a bit
different. When Hubert de Givenchy retired, Mr. Givenchy tried to name his
successor: a man who’d trained for years in the atelier beside him. Mr.
Arnault, however, overruled the decision and installed Alexander McQueen-who
exhibited little respect for both Audrey Hepburn and the petites mains -at the head of the house.
“[Designing for a conglomerate] is like going public,” Mr. Blass
said. “And it will ultimately affect design. You have to provide the dollars,
and that always affects the product. It’s quite a different situation from
owning your own company.”
Regardless, the approach has been effective. Instead of sitting
in the front row at Michael Kors’ “Palm Bitch” ready-to-wear show in New York last September, Mr. Arnault was home in Paris
announcing plump profits: a 59 percent increase in net income for the six
months ending June 30. Operating income for the fashion and leather goods
division of the company was up 15 percent over the same period last year.
The designers affiliated with LVMH issue pat statements about how
grand their lives are. Michael Kors described his working relationship with Mr.
Arnault in a word: “terrific.” And John Galliano, decked out at the Sephora
party in acid-washed jeans, like an avant-garde pirate, gushed as well. “I’m
very proud,” he said. “It’s such a symbol of French luxury. It’s like standing
on the Eiffel Tower!”
The ground floor of the 57th Street Dior boutique space is
boarded up. On a recent afternoon, a man with long sideburns stood outside to
smoke with a European “Can you even believe I can’t smoke inside?” look on his
face. The building is green, and it’s enormous. “Not unlike a seashell,” the
press kit had promised. But it is quite unlike a seashell.
Mr. de Portzamparc, the architect, faced a curious dilemma when
drawing up his plans. Originally, the building’s volume was to be the same as
that of Chanel, the staid, granite Frenchman next door. “We would have the same
dimension, so we would be like two French twins,” Mr. Portzamparc said.
“Bernard Arnault was aware that the building would be the same as Chanel, and
then it would not be a flagship store.” So more space was acquired. The little
Wally Findlay Gallery next door was knocked right over. Bam! LVMH won’t match
Chanel anymore. It’ll be bigger.
Another problem arose. “I.B.M. is right across the street,” Mr.
Portzamparc said, “and we would just be a reflection of I.B.M.” So, on Mr.
Arnault’s orders, he procured some very expensive nonreflective glass. Now, in
addition to dwarfing Chanel, the building outshines the American behemoth
across the street. It is barely possible-in any light-to see I.B.M.’s
foreboding facade reflected in the glass