World’s richest man likes the view atop refurbished Tiffany

LVMH chief executive Bernard Arnault urges his executives to think about desirability instead of profitabilty. As Tiffany & Co. reopens its New York flagship, price lifts, retail design and a recent marketing blitz poise the brand for growth.

Bernard Arnault has built LVMH to be valued at around $500 billion.

As a young tycoon living in New York in the 1980s, Bernard Arnault quickly realised some of the most valuable real estate was located on the corner of Fifth Avenue and 57th Street. When he bought the building that houses the Louis Vuitton flagship store on the northeast corner, he got a close-up view of Tiffany & Co. across the street to the south.

“We said, maybe at one point we’ll have more than one corner,” Mr Arnault said in a rare interview from the glass-enclosed top floor of Tiffany’s newly renovated store, where he could gaze out and survey his domain. He now has three.

Mr Arnault, chief executive, chairman and controlling shareholder of LVMH Moët Hennessy Louis Vuitton SE, has literally and figuratively cornered the luxury-goods industry. With the acquisition of Bulgari in 2011, followed a decade later by Tiffany, the only corner of the gilded intersection he doesn’t control is owned by department store Bergdorf Goodman.

Since his acquisition of Dior in 1984, Mr Arnault has built LVMH, now valued at around $500 billion, through a series of high-stakes corporate takeovers while also cultivating fashion designers. Rivals call him the “wolf in cashmere.” Demand for the company’s dozens of brands, including jewellery, fine wine, fashion labels and upscale hotels, helped LVMH emerge from the pandemic as the most valuable listed company in Europe. It also helped Mr Arnault surpass Elon Musk as the world’s richest person.

Mr Arnault, 74, has had his doubters along the way. A little over two years ago, he tried to back out of the Tiffany deal after the Covid-19 pandemic threw the luxury industry into turmoil. After Tiffany sued, he went ahead with the purchase at a slightly reduced price. Some observers at the time thought he overpaid.

Now it is the opposite, said Mr Arnault, who was clad in a Celine pinstripe suit, Christian Dior tie and Loro Piana loafers – all brands he owns. On his wrist was a Patek Philippe Nautilus watch with a Tiffany-blue face. “People say, ‘Oh, you may have underpaid, you may have done a very good deal.’” Mr Arnault said Tiffany was a dormant brand before the acquisition, with sales plateauing as overall jewellery sales were growing. “We bought it after a good five-year sleep,” Mr Arnault said. “It was good timing.” Jewellery sales soared during the pandemic as people stuck at home treated themselves to luxuries in lieu of travelling, dining out and other experiences. Under LVMH, Tiffany participated in that boom. Tiffany no longer discloses financial details, but Mr Arnault said the jeweller’s profits doubled in the past two years.

Tiffany had sales of 5.12 billion euros in 2022, or about $5.65 billion, according to estimates from Erwan Rambourg, the global head of consumer and retail research at HSBC. In 2019, the last full year before it was acquired, Tiffany reported $4.4 billion in sales.

Since taking over, LVMH has put in place a new management team of roughly a dozen people, the majority of which came from other luxury brands, including several from LVMH businesses. Mr Arnault’s son Alexandre Arnault was installed as executive vice president of product and communications. He is one of Mr Arnault’s five children who the luxury magnate is preparing to one day succeed him.

Under Alexandre’s direction, the company embarked on a marketing blitz designed to raise Tiffany’s profile and appeal to a younger audience. A 2021 ad campaign featured married musicians Jay-Z and Beyoncé, who crooned “Moon River,” the theme song of the 1961 movie “Breakfast at Tiffany’s” that starred Audrey Hepburn.

Tiffany has also elevated the brand by lifting its entry price for jewellery, and rolled out new collections such as Lock, which is mined from the Tiffany archives and makes use of a swivel mechanism that echoes the functionality of a padlock.

At the same time, it has boosted so-called high jewellery, which typically starts at around $100,000. Mr Arnault said the proportion of high-end jewellery sold by Tiffany was declining before he bought the company.

Being part of LVMH has given Tiffany financial advantages as well as extra clout in negotiating better retail placement. “The success of a mall is very often due to our presence,” Mr Arnault said. “And we already have several examples of very nice shops we were able to secure for Tiffany.” LVMH spent hundreds of millions of dollars to renovate the flagship store, which accounted for about 10 per cent of the brand’s global sales before it closed for renovations in 2019. Some analysts estimate the cost was around $500 million.

When asked to confirm that number, Mr. Arnault said: “You cannot dream when you talk numbers.” Instead of thinking about profitability, Mr Arnault urges his executives to think about desirability. “When you create desire, profits are a consequence,” he said.

Mr Arnault said he sees opportunities for Tiffany to expand in Europe and China. As other Western companies have looked at scaling back investments in China amid geopolitical uncertainties, Mr Arnault is moving ahead. He met last week with China’s commerce minister and discussed the potential for Chinese consumers to start travelling abroad again.

“Many in the US are still buying a lot of Chinese products and vice versa,” Mr Arnault said. “I don’t think that either for the Chinese economy or for the US economy, it would be good to stop that.” As he was negotiating to buy Tiffany, Mr Arnault visited the flagship store and received a guided tour by a senior Tiffany executive. “We got lost in the building,” Mr Arnault said. “Here is a guy getting lost in his own shop. I said, ‘We have some work to do on this.’” He wasn’t happy with the renovation plans proposed by previous management that reflected the traditional dark wooden interior of the original, which opened in 1940. “We decided to stop this and do something else, which is more in line with the beauty and the myth which is Tiffany,” he said. “Tiffany is, I think, the most recognisable and the most mythical US brand in the world.” Today, each floor is different and splashy. Art abounds, including a painting by Jean-Michel Basquiat in a robin’s-egg blue similar to Tiffany’s boxes that hangs on the ground floor. A stainless-steel Anish Kapoor wall sculpture is mounted in the third-floor wedding and engagement area, and one of Julian Schnabel’s signature broken-crockery paintings hangs on the sixth floor.

The architect Peter Marino, who has designed boutiques for other LVMH brands, included a so-called Audrey Room on the fifth floor, which features the Givenchy dress the actress wore in the opening scene of “Breakfast at Tiffany’s.” LVMH also owns Givenchy.

The first floor of Tiffany’s flagship New York location.

“It’s like visiting a place with architecture and a bit of history,” Mr. Arnault said of the store, which reopened this week. “You can spend your day here.” Mr Arnault said that part of the secret to LVMH’s success is its decentralised structure that gives the managers of each of its 75 brands the autonomy to make decisions. He weighs in at the larger brands, though. “I am very much in the details,” Mr. Arnault said.

He was in weekly contact with Mr Marino about the Tiffany renovation, and questioned the architect’s original plan, which didn’t include using the Tiffany blue in the Blue Box Cafe that serves caviar, Champagne and other fare.

“I told him, it’s a Blue Box cafe, do something with blue,” Mr Arnault said. Now, the cafe walls are painted in the signature colour and blue Tiffany boxes hang from the ceiling.

After decades of deal making, is Mr Arnault done? In the interview, the billionaire expressed admiration for Cartier, which is owned by rival luxury group Cie. Financière Richemont SA, and whose success he hopes to channel as he remakes Tiffany.

“Cartier is a fantastic brand,” Mr Arnault said. But he added: “It’s not for sale.”

The Wall Street Journal.