Family-controlled luxury goods company LVMH will be buoyed by its recent investment in fellow family businesses Bulgari and Hermes as the two groups reported strong first quarter results.
Jewellery house Bulgari, whose family members have sold 51% control of the company to Bernard Arnault’s LVMH, announced on 10 May that its net profits rose to €9.3 million for the quarter, after a loss of €8.3 million during the same period last year.
The group attributed the growth to a combination of product development, greater efficiency and good communication practices.
Third-generation family member and chief executive Francesco Trapani said in a statement: “The alliance with LVMH will certainly lead to further expansion in the areas with the highest potentials worldwide.”
While these strong results were a pat on the back for Arnault and his timely purchase of Bulgari, there was more good news to come as Hermes also announced a 25.5% rise in sales for the first quarter to €637 million.
The group said in a statement that it had robust sales in all regions except Japan, which is still feeling the effects of the recent earthquake and tsunami.
LVMH has a 20% stake in Hermes, famous for its Kelly handbags, which it built secretly last year (Continue reading here). With both Hermes and Bulgari announcing positive results for the first quarter, Arnault’s smart acquisitions seem to have paid off for the family business.
The luxury goods market was hard hit during the financial crisis, but has seen a quick rebound helped by growing demand for luxury products from emerging economies, led by China. Arnault’s place on the rich list is testament to that – he was ranked the seventh richest man in the world in 2010 by Forbes with an estimated wealth of $27.5 billion.
Paris-based LVMH began in 1987 after Arnault used his father’s money to purchase Christian Dior. Daughter Delphine joined the company in 2000 and became the first woman on the board in 2003. The Arnault family own 47% of LVMH through their holding company, Groupe Arnault. It had 2010 revenues of €2.3 billion.