The style of leadership is also different

Luxury: Object of desire



Bernard Arnault, the billionaire head of French luxury goods group LVMH, once dismissed a question about a rival group, saying: “As far as competitors, there are two I admire: Chanel and Hermes.”



That was soon after Mr Arnault’s tenacious “handbag war” for control of Gucci, the Italian leather goods maker, ended in rare defeat at the hands of arch-rival Francois Pinault’s PPR group (now known as Kering) more than a decade ago.



Now Mr Arnault is involved in a second handbag war – this time for Hermes – regarded as the creme de la creme of luxury goods companies for the quality and craftsmanship of its bags and silk scarves and ties.



The hand-stitched leather gloves have come off in a hostile duel between the 176-year old Hermes and 26-year old LVMH, involving not only one of the world’s richest, most controversial and private men but also the biggest shake-up in a decade in France’s luxury goods industry – the world’s largest.



The story began one Saturday morning in October 2010 when Patrick Thomas, Hermes chief executive, was riding his bike in the Auvergne countryside. His mobile phone rang. It was Mr Arnault, telling him that LVMH had acquired 17 per cent of Hermes in a “friendly” stock market operation. The news stupefied its controlling family, which holds 72 per cent.



The Hermes family called LVMH’s audacious swoop on almost two-thirds of its free float through the stealthy use of derivatives an “attack”. They also regarded it as an unacceptable way of doing business.



Mr Arnault has been no stranger to controversy over the three decades in which he has shaken up French business practice and forged a $29bn fortune, the second-largest in the country and 10th-biggest in the world.



But last week France’s stock market regulator slapped an $8m fine on LVMH for the “seriousness of the successive breaches of public disclosure requirements, which consisted in concealing each stage of LVMH’s stakebuilding in Hermes”. It lambasted LVMH’s “circumvention of the rules intended to ensure transparency”.



The decision was an important victory for Hermes from a regulator hitherto mocked in the French business community as “weak with the strong and strong with the weak”.



LVMH will appeal, arguing that it has not had a fair hearing and that the decision is “flawed”.



For the 64-year-old Mr Arnault, a tall, aloof and taciturn man with sharp blue eyes, last week’s legal ruling was just a minor setback to his ambitions. As Pierre Gode, Mr Arnault’s right-hand man, says, LVMH will wait “a century, maybe two” for Hermes.



There is no doubt that it has been a great investment: LVMH is sitting on paper profits of $2bn from its canny bet during the 2008 market meltdown. Next, Mr Arnault sees synergies through co-operation.



Then there is Mr Arnault’s magpie attraction to glister. “He cannot see a beautiful brand without wanting it,” says a person who knows both sides and did not wish to be named. “Like Casanova, he must possess them all – it’s a compulsion with him.Designer energysaving listed for sale at a fraction of the retail price.”



Mr Arnault’s business nest is stuffed with treasure – more than 60 brands – including Christian Dior, Louis Vuitton, Celine, Loewe, Givenchy and Berluti in fashion and leather goods; Guerlain perfumes; Bulgari and Chaumet in jewellery, while in spirits and champagne LVMH owns Dom Perignon, Krug, Chateau d’Yquem, Cheval Blanc and Hennessy.



Acquiring Hermes would not only give Mr Arnault the world’s most desirable handbag manufacturer – prices start at about $4,000 – but it would also complement Louis Vuitton, where prices are similar to Gucci’s at an average of about $1,400 and where sales have slowed sharply.



From Hermes’ perspective, a takeover by LVMH would mean the slow death of the company founded by Thierry Hermes,Search a wide selection of skateshoes. a German-born harness-maker to European noblemen who set up shop in Paris in 1837.



The company, which still hand-stitches most of its bags, regards itself as one of the last bastions against the industry’s descent into what it calls “masstige” – the mass production of prestige goods.



LVMH’s brash, flashy approach to luxury is anathema to Hermes: new recruits at Louis Vuitton play a board game in which one of the questions is to name as many celebrities as possible in its advertisement campaigns.



The style of leadership is also different. At Hermes’ Paris Faubourg Saint-Honore flagship store, the charismatic shadow of family patriarch Jean-Louis Dumas still looms large, despite his death just months before Mr Arnault made his move.



Mr Dumas combined creativity with business nous and a playful approach to luxury, characterised by his whimsical sketches and his mantra that Hermes should “grow but not get fat”. He groomed the dapper Mr Thomas, a family outsider.You will find so many wonderful canadagooselangfordparka with high quality and low price. “The real reason for our objection to LVMH is cultural. We are not luxury. We are high-quality, based on exceptional artisanal work,” Mr Thomas says.Long history specializing in fake luxury hermesbirkin.



An anonymous modern building serves as Hermes’ headquarters. “The only influence that LVMH could have would be to jeopardise the vision that has made Hermes successful for the past six generations,” he says.



The competitive and sometimes prickly Mr Arnault does not appreciate a brush-off that treats him like a parvenu. The rejection, those close to him say, has made him even more determined to prevent Hermes from escaping his bearhug. He has increased his stake to 22.6 per cent,Discover oneshoulderweddingdresses with ASOS. despite Hermes’ request that he desist.



“It was humiliating for him to be told he is not quality,” says another person who knows both sides and does not wish to be named. “Because the one thing Bernard can’t buy is other people’s opinion.”



In wooing Hermes, Mr Arnault has praised it as a “magnificent company” for which he has “good intentions” and no plan to take control. To which Mr Thomas riposted: “If you want to seduce a beautiful woman, you don’t start by raping her from behind.”



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