It’s all change again at LVMH’s Fashion Group
Astrid Wendlandt /MISSTWEED
19/05/24
Michael Burke has discreetly left his position as CEO of LVMH's Fashion Group several weeks ago, less than three months after starting on Feb. 1, sources with first-hand knowledge of the matter have said.
Burke's unexpected departure has prompted LVMH CEO Bernard Arnault to call back his predecessor Sidney Toledano, delighting the former Dior boss. Toledano does not like the word retirement. The LVMH veteran, who turns 73 in July, has never made a secret of his desire to remain in charge in some capacity or another at the group for as long as Arnault would let him.
The management reshuffle highlights how difficult is LVMH's changing of the guard. The men Arnault trusts the most have reached retirement age and many of his new lieutenants have not yet passed the test of time.
Arnault did not expect Burke, 67, to depart so abruptly. His stalwart associate left for personal reasons, several people close to the matter said on condition of anonymity. The Franco-American led many of the group's businesses, including its main profit maker Louis Vuitton, until last year.
Burke's nomination, which Miss Tweed was the first to report in April last year, took a long time to come - a sign he was not certain to take the job. And now, Burke is going back to real estate deals, which he first did when he began working with Arnault in the United States in the 1980s, before the two friends started building LVMH together. He is currently working on the group's acquisition of some buildings in the United States and elsewhere, several industry sources said. Burke did not reply to requests for comment. A spokesman for LVMH denied the management reshuffle at the Fashion Group.
Arnault rewards loyalty. Toledano has been at LVMH for 30 years. His re-appointment was a quick short-term measure to prevent the Fashion Group from being headless for too long, the sources said.
However, Toledano is not alone at the helm of the Fashion Group. He is seconded by Pierre-Emmanuel Angeloglou, who was appointed managing director on March 11. At the time, LVMH said he would take over the "direct responsibility of a portfolio of brands within the Fashion Group division which include Fendi, Kenzo Mode, Marc Jacobs, Pucci, Stella McCartney, Patou and Off-White." It's not clear whether Angeloglou, who spent 23 years at L'Oréal and four years at Louis Vuitton, has the right profile to become CEO of the Fashion Group but eventually, Toledano will have to be replaced.
The fact that Arnault did not think of a potential replacement for Burke highlights how complicated it is for him to give the keys of the house of the Fashion Group to the new generation.
Burke's exit comes just after the departure of another pillar of the group's top command - Toni Belloni. In March, the Italian resigned as group managing director, a position he held for 23 years. Belloni also relinquished his post as chairman of the executive committee but stays within the group as president of LVMH Italy. He was replaced by Stéphane Bianchi, who previously looked after the group's watches and jewelry division, a job occupied now by Fréderic Arnault. Bianchi has not been with LVMH for very long.
He led Yves Rocher for many years and groomed Bris Rocher, the grandson of the company's founder before joining the luxury group in 2018. Bianchi is said to be an authoritative figure that many in the group fear. He has never accepted to speak with Miss Tweed.
DELPHINE ARNAULT
At the Fashion Group, Toledano will be seconded by the eldest of Arnault's five children, Delphine. She became CEO of Dior in February last year after being Executive Vice President for a decade at Louis Vuitton in charge of products.
The 49-year-old is the only Arnault child sitting beside the father on LVMH's executive committee. She will help Toledano choose new creative directors, something she has already done successfully, having recruited designers such as Jonathan Anderson for Loewe and Nicolas Ghesquière for Louis Vuitton more than a decade ago.
It's not clear whether Delphine Arnault will be given an official title at the Fashion Group on top of her responsibilities at Dior. "Nothing has been announced yet," several sources close to the group said when asked about her role and the return of Toledano as CEO. As of Friday, Toledano had not yet replaced Burke on the executive committee, according to LVMH's official website.
For the moment, Arnault does not wish to communicate about the move, several people with first-hand knowledge of the matter said. "It looks disorderly - just a few months after he started" one of the sources said
LVMH has never clearly spelled out the responsibilities of the person in charge of the Fashion Group. These include the appointment of CEOs, designers and key positions at the 13 brands that fall under its umbrella: Celine, Fendi, Loro Piana, Loewe, Givenchy and Kenzo, among others. The CEO also validates each brand's merchandising and marketing plan and oversees budgets for new boutiques as well as their location. "It's an HR and strategic advisory job," one source close to the group explained.
TO-DO LIST
The management upheaval comes as important strategic decisions need to be taken at several of the Fashion Group's brands. High up on Toledano's to-do list is the need to appoint a new creative director at Fendi. The brand's sales have been underperforming its peers for many years and were in decline in 2023.
Some fashion experts believe Pierpaolo Piccioli, who left Valentino in March, would be great to replace Kim Jones as creative director of Fendi. Piccioli would help build a strong Roman identity, tapping into his vast knowledge of the city's art and history, and celebrate in style Fendi's 100th anniversary next year.
Some fashion experts believe Pierpaolo Piccioli, who left Valentino in March, would be great to replace Kim Jones as creative director of Fendi. Piccioli would help build a strong Roman identity, tapping into his vast knowledge of the city's art and history, and celebrate in style Fendi's 100th anniversary next year.
But he comes with some drawbacks. Piccioli is great with haute couture and evening wear, but not so strong in daytime ready-to-wear. Also, his latest bag collections for Valentino were not a huge success. That could be a concern when considering him for Fendi, fashion head-hunters say. But these are not insurmountable obstacles.
Another brand that needs a new designer is Givenchy. It's been actively looking for a replacement since its creative director Matthew Williams left on Jan. 1st
Some industry sources say John Galliano, who designed two beautiful collections for Givenchy in 1996, is one of the many names in the hat. But his candidacy is a tricky one as the man has baggage.
Galliano is known as one of the most difficult designers for CEOs to handle due to his personality and character. He wants to control everything, which is not something LVMH would be comfortable with. But in terms of creativity and building a brand's desirability, he's one of the best in the industry. Galliano is now doing wonders at Maison Margiela, part of Renzo Rosso's OTB group. His March show inspired by the underbelly of Paris was the most applauded collection during Fashion Week. At the Met Gala in New York earlier this month, many ladies - including red carpet superstars such as actress Zendaya - paraded in his flamboyant dresses. Galliano has a natural talent for showmanship.
His outfits are theatrical and designed to impress.
He was hugely successful at LVMH's Dior for many years until 2011, when he was sacked after being caught on camera making anti-Semitic rants in a Paris bar. It's far from certain that Toledano, who was the person who kicked him out, feels comfortable taking him back, industry sources say. But Galliano would surely give the brand a convincing creative impetus.
There is also Celine with designer Hedi Slimane is on his way out, as Miss Tweed was first to reveal last month. Sales growth there has slowed down markedly in the past year, industry sources say. Celine's sales are now estimated at €2.1 billion. The brand has inundated the market with its Triomphe leather bags with the double C golden lock that looks a lot like that of Chanel. Many customers have grown tired of it, industry experts say. Now Celine needs to produce something new.
The timing of Slimanes exit has not yet been determined. It depends on how easily a replacement is found. Managing that transition is not going to be easy for Toledano and Delphine Arnault.
KENZO
Kenzo is also on the list of problems to solve. The brand founded by Kenzo Takada in 1970 has been struggling to reinvent itself. Few designers have been able to make it relevant since the departure of designers Carol Lim and Humberto Leon in 2019. The brand's creative director today is Japan's Nigo, who speaks neither French nor English. He has been producing mainly T-shirts and sweatshirts - what he knows best - but his designs have not seduced many clients. The demand for €150 T-shirts is not great in the current depressed environment. People want value for their money and are less willing to overpay for fashion.
Kenzo's sales have not been growing for many years and are now estimated to be around €250 million. Nigo's style has little in common with the relaxed chic tailoring and the leopard, zebra and other animal prints Kenzo was once known for. The brand today does not ooze the refinement it once had. Hence, consumers are unwilling to pay high prices for its wares.
Some fashion critics argue Nigo is not well coached by Kenzo's CEO Sylvain Blanc. He really could do better in terms of design, they say. The Japanese designer is close friends with Pharrell Williams, the popstar singer who is the menswear creative director at Louis Vuitton. "While Pharell is at Vuitton, I don't think they will get rid of Nigo as Pharrell keeps wearing Nigo's clothes." However, LVMH may eventually decide to part ways with Nigo if the group finds a suitable replacement.
Another of the Fashion Group's problem children is Stella McCartney. The environmentally friendly brand founded by the daughter of former Beatles star Sir Paul McCartney continues to lose vast sums of money. Its costly boutiques generate too little revenue, some industry sources say. Arnault invested in the brand to strengthen LVMH's "green" aura and benefit from McCartney's sustainable fashion expertise. However, he probably never expected that business would cost the group so much money.
And then there's Off-White, whose intellectual property rights belong to LVMH but whose license for its manufacture and distribution belongs to Farfetch's New Guards Group (NGG). NGG has been on the market for many months and has yet to find a buyer. Patou, led by the talented designer Guillaume Henry, is also under the Fashion Group umbrella. It has been developing nicely, but it's still tiny compared to its sister brands. As a result, it does not benefit from the same management attention and budgets as other bigger brands.
MARC JACOBS
LVMH has been quietly trying to trim the Fashion Group's portfolio in recent months, putting the Marc Jacobs brand on the market to test investors' appetite. The French group did not receive offers that matched its expectations, as Miss Tweed reported last week. Investors are not crazy. They know that the brand's peak is behind it and has hardly any boutiques left. It sells mainly through wholesale channels, outlets and online. The brand's 61-year-old founder Marc Jacobs is tied to the brand only until 2027. Without him, no one knows what will become of the New York-based label.
Luckily for Angeloglou and Toledano, there are a few strong success stories at the Fashion Group. The "quiet luxury" ready-to-wear brand Loro Piana has been exploding, thanks to its sober and elegant designs and white-soled suede loafers that are a huge hit, even among young consumers. There is also Loewe, whose original and creative handbags are high up on fashionistas' wish lists. The brand's fashion authority and aura keep growing year after year under the creative leadership of Jonathan Anderson. Loewe and Loro Piana enjoyed growth of more than 40 percent last year in a tough global market, several sources close to the group said. Loewe's revenues this year could reach as much as €1.5 billion, they forecast.
Pucci is another brand that is thriving even if it is still small compared to other labels in the Fashion Group. The popularity of these three brands will help make Toledano's job easier. But the list of problems he needs to solve remains impressively long.