by
Bloomberg
Published
July 17, 2024
As demand for luxury goods and beauty products declines in some regions, the fortunes of some of the world’s richest people have also declined.
The drop knocked Bernard Arnault, 75, the founder of handbag and champagne group LVMH, off the top spot on the Bloomberg Billionaires Index. In another sign of more austere times, L’Oreal heiress Francoise Bettencourt Meyers briefly lost her crown as the world’s richest woman earlier this month to Alice Walton, a member of the family that founded US retailer Walmart.
The extent of the market’s decline became starkly clear this week as earnings season kicked off with a crisis at British luxury coatmaker Burberry Group Plc and sales at Swatch Group AG plunging. L’Oreal, LVMH and other industry giants backed by billions of dollars are due to report later this month.
Overall, the fortunes of the half-dozen ultra-rich who derive their wealth from expensive pampering products have fallen 4% this year, or about $17 billion, through Monday’s close, according to the index. That compares with a 13%, or $1.0 trillion, gain for the rest of the 500-person ranking. The last time the gap between the two groups was this wide was in May 2022.
The decline masks disparities that have emerged across the sector depending on factors such as brand popularity and exclusivity. The losers are Bettencourt Meyers, Arnault and his old rival François Pinault, 87, who founded Gucci-owner Kering SA. The French companies controlled by the trio have also been hit by investor caution in their home country after President Emmanuel Macron called early elections that left a hung parliament and no government.
pessimistic view
Arnault’s fortune has fallen by $7.4 billion over the past year to $200.1 billion, now trailing the fortunes of Tesla Inc. founder Elon Musk and Amazon.com Inc. founder Jeff Bezos. LVMH, the company he built over more than three decades into a giant with 75 brands including fashion house Christian Dior, jeweler Tiffany & Co. and Hennessy cognac, reported a marked slowdown in sales growth of fashion and leather goods in the first quarter and a general decline in Asia, excluding Japan.
L’Oréal’s gloomy outlook in China has weighed on the fortune of Bettencourt Meyers, 71, who in December became the first woman to reach $100 billion in fortunes before her fortune slipped to about $91 billion. With high-end brands such as Aesop, Lancôme and Yves Saint Laurent, as well as less expensive brands such as L’Oréal Paris, Garnier and Maybelline, the company, in which she and her family own a stake of about 35%, is trying to weather the slowdown across regions and price points.
Pinault’s fortune has fallen most dramatically, halving in the past three years to $28 billion, as his empire’s troubles deepen from a slowdown in China and political uncertainty in France. Kering, which is headed by his son François-Henri Pinault, warned in April that profits would fall in the first half of the year as the company tries to turn around its biggest brand, Gucci, which is struggling.
Meanwhile, luxury billionaires have grown their fortunes over the period, including the Wertheimer brothers behind Chanel, widely regarded as one of the most recognizable luxury brands. The company, which is owned by a small group of investors, reported double-digit growth last year, though it warned that the market had become more challenging and that demand for its tweed handbags and suits had slowed in the Americas.
South African billionaire Johann Rupert, 74, who controls Richemont, owner of Cartier, also emerged as a winner. Richemont’s resilience was on display Tuesday when the company reported higher sales from its jewelry brands, including Van Cleef & Arpels and Buccellati, offsetting an overall 27% drop in revenue from Greater China.
Investor relief sent shares slightly higher, but that didn’t extend to LVMH, L’Oreal or Kering, which ended lower in Paris on Tuesday. The industry was rattled Monday by a profit warning from Burberry and its plan to replace its chief executive. Swatch Group AG also reported a drop in sales and profits amid a China-led slowdown for Swiss watchmakers and other luxury companies.