The world’s largest luxury goods group is undergoing “epic-level” changes.
Recently, according to the National Enterprise Credit Information Publicity System, there have been changes in the legal representatives and chairpersons of LVMH Group’s two companies, Louis Vuitton Moet Hennessy Perfumes & Cosmetics in Shanghai and Hainan. This has sparked speculation about personnel adjustments in LVMH’s beauty business in China. An insider close to LVMH’s headquarters exclusively revealed, “This change does not involve adjustments to Chinese personnel,” and stated that the change was due to a CFO change at Parfums Christian Dior.
In fact, turmoil has been ongoing in the top echelons of LVMH Group this year, with changes in the Chief Financial Officer, Chief Human Resources Officer, and core positions in several departments. Due to some position adjustments involving Bernard Arnault’s children, the controlling shareholder and CEO of LVMH Group, this round of changes is seen as a signal of the Arnault family strengthening its control over LVMH Group.
According to media reports, there have been recent rumors of the departure of Stéphane Rinderknech, head of LVMH Group’s beauty and hotel divisions. As of the time of writing, LVMH Group has not responded to these rumors.
When the wind rises, the rain is imminent. Where will LVMH Beauty head next?
CHAILEEDO exclusively learned about the changes in the legal representatives behind LVMH in China
Recently, from the National Enterprise Credit Information Publicity System, it was learned that the legal representatives and chairpersons of Louis Vuitton Moet Hennessy Perfumes & Cosmetics (Shanghai) Co., Ltd. (hereinafter referred to as LVMH P&C) and Louis Vuitton Moet Hennessy Perfumes & Cosmetics (Hainan) Co., Ltd. have changed from Bertrand, Albert, Francois, TEFRA to Thomas, Francois, Jean BAUDRY.
Bertrand, Albert, Francois, TEFRA previously served as the legal representative and chairman of LVMH P&C for over four years, which has led to speculation about a change in leadership at LVMH Beauty China.
According to the official public account of “LVMH Perfumes & Cosmetics Recruitment,” Louis Vuitton Moet Hennessy Perfumes & Cosmetics was established by the LVMH Group in 2000 and is responsible for the sales of some perfume and cosmetics brands under the group in China, including Dior, Guerlain, Givenchy, Benefit, Make Up For Ever, Acqua di Parma, and Fresh, among others.
Regarding this change, an insider close to LVMH Group’s Paris headquarters exclusively disclosed to CHAILEEDO that this change does not involve adjustments to Chinese personnel, “There have been no changes to personnel in China, the change comes from an internal adjustment at Parfums Christian Dior.”
“The position of CFO of Parfums Christian Dior has been replaced by Thomas Baudry, and Parfums Christian Dior is the parent company of Louis Vuitton Moet Hennessy Perfumes & Cosmetics (Shanghai) Co., Ltd.,” the insider further explained.
It is worth mentioning that the above adjustment is just a microcosm of the personnel earthquake at LVMH Group this year. Since the beginning of this year, the significant personnel changes at LVMH Group have almost dominated the headlines of major fashion media outlets. Particularly in November of this year, LVMH Group witnessed several major personnel changes in quick succession, a frequency of personnel adjustments that is not common in the history of LVMH Group.
In March of this year, Toni Belloni, Managing Director and Executive Committee Chairman of LVMH Group, announced his resignation and departure from the board. Belloni had led LVMH’s acquisitions of Tiffany and Bulgari and had significantly contributed to the group’s performance growth several times over during his 12-year tenure.
Recently, LVMH Group has announced multiple high-level executive appointments in quick succession, involving the wine and spirits department Moët Hennessy and the group’s finance and human resources departments. One of the members of LVMH’s Executive Committee and Head of Human Resources, Chantal Gaemperle, resigned. According to reports, she was rumored to have disagreements with the Arnault family’s children and was implicated in a scandal involving abuse of power.
Additionally, several key management figures at LVMH Group, such as Chief Financial Officer Jean-Jacques Guiony and Bernard Arnault’s second son Alexandre Arnault, have taken on new positions.
CHAILEEDO noted that in the beauty-related business sector, apart from Guillaume Motte, President and CEO of Sephora (under the luxury retail department), joining LVMH Group’s Executive Committee in January next year and some positions being expanded, the official LVMH Group has not yet announced any major changes in the senior management of the beauty business.
However, according to fashion media outlet Miss Tweed, the LVMH Beauty department has recently not been as calm as it appears. For instance, just a month ago, Alessia Gargano, Head of Human Resources at LVMH’s Hotel and Beauty division, was dismissed.
And recently, the head of LVMH Beauty, former CEO of L’Oréal China, Stéphane, has also been embroiled in rumors of departure. According to foreign media reports, “Stéphane will be the next to lose his job,” citing several harassment cases during his time at L’Oréal and an ongoing investigation into his alleged mistreatment of LVMH employees.
It is well known that in March 2023, Stéphane was appointed Chairman and CEO of the LVMH Group’s Beauty division, responsible for LVMH Group’s global beauty business. During his tenure of over twenty months, Stéphane rarely made public appearances or statements, except when in March of this year, he announced the empowerment of two key figures in the beauty division.
According to media reports, Stéphane’s successor may be Laurent Boillot, who previously served as President and CEO of Hennessy and led the French perfume brand Guerlain. In November of this year, Laurent Boillot appeared at the 7th China International Import Expo, expressing a special affection for Chinese culture and having personally founded the high-end skincare brand Cha Ling, closely related to Chinese culture.
The perfume and cosmetics business is growing the fastest, impacting the global beauty TOP5.
Since the beginning of this year, the global luxury goods industry has gradually slowed down, experiencing a historic low. In this context of the luxury goods engine “stalling,” the growth of the perfume and cosmetics business has added a bright spot to LVMH Group’s financial reports.
According to the official website of the LVMH Group, the group owns 75 well-known brands, including 16 perfume and cosmetics brands. These include classic brands with rich history such as Dior, Givenchy, Guerlain, as well as relatively young beauty brands like Benefit and Make Up For Ever. In 2023, the revenue of LVMH’s perfume and cosmetics business amounted to 8.271 billion euros, with organic revenue growth of 11%.
According to LVMH Group’s financial report for the third quarter of the 2024 fiscal year, in the first 9 months of 2024, LVMH’s revenue decreased by 2% year-on-year to 60.75 billion euros, remaining stable compared to the same period last year on an organic basis.
Among them, the cosmetics-related division performed notably well, with a 5% year-on-year growth, reaching 6.1 billion euros in revenue in the first three quarters of this year. Along with the fashion retail sector, it became one of the only two departments of LVMH Group to maintain growth in the first three quarters. LVMH attributed this growth to its “strong innovation strategy” and “highly selective distribution policy.” Looking at individual quarters, the perfume and cosmetics division saw growth of 7%, 4%, and 3% in the first three quarters of this year, maintaining positive growth.
In terms of brands, Christian Dior continued to perform well in the first three quarters, with Sauvage (Dior’s men’s fragrance) achieving steady growth, solidifying its position as a world-leading perfume. Guerlain perfumes also performed exceptionally well, thanks to the L’Art & La Matière series and the new Florabloom fragrance added to the Aqua Allegoria series.
In the makeup and skincare categories, the relaunch of Guerlain’s Rouge blush and new products in the KissKiss series drove growth in the brand’s makeup revenue. Additionally, Dior’s Prestige (high-end skincare series) and Capture series also contributed to performance growth.
It is worth noting that Sephora, the high-end beauty retailer belonging to LVMH’s fashion retail division, performed well, increasing market share in North America, Europe, and the Middle East.
Looking at the global beauty market landscape, based on revenue in the first three quarters of 2024, LVMH’s beauty business ranks sixth globally, surpassing Shiseido and Coty, and trailing only international beauty giants like L’Oreal, Unilever, and Estée Lauder. LVMH’s beauty business and Beiersdorf’s revenue in the third quarter of this year are very close, maintaining a significant lead over the seventh-ranked Shiseido, indicating that the two may engage in strong competition for a position in the top 5.
“Breaking the Ice” in the Chinese Beauty Market, LVMH’s Beauty Adjustments in Progress
While LVMH’s global perfume and cosmetics business has been showing good growth, its performance in the Chinese market has been less than satisfactory. This was confirmed in the third-quarter financial report this year, where the Asian market, including China, saw a 12% decline in organic revenue in the first three quarters, making it the only market recording a decline.
Looking back at LVMH’s actions in the Chinese beauty market this year, channel adjustments, introducing new brands, and cost reduction have become key strategies.
Take Sephora, for example. On one hand, by introducing new brands like Fenty Beauty from the LVMH group exclusively in Sephora, and well-known skincare brand Drunk Elephant entering exclusively into Sephora this year and expanding to cover 300 stores nationwide in the second half of the year, Sephora is driving business growth. On the other hand, Sephora is laying the groundwork for a resurgence in the Chinese market through changes in management and layoffs.
It is worth mentioning that LVMH’s makeup brand, Benefit, closed its official online stores on Tmall and Douyin in January this year and withdrew from the Sephora channel, but announced its return during the Double 11 shopping festival by opening a Tmall overseas flagship store, maintaining its presence in the Chinese market while reducing costs.
In the supply chain sector, back in October last year, with the opening of the LuManYuan in the XinZhuang Industrial Zone, the e-commerce sales platform and supply chain management center of LVMH Shanghai began operation, with a total investment of nearly 1 billion RMB.
According to the official WeChat account of the “Xinzhuang Industrial Zone in Shanghai,” in August this year, Jean-Michel Moutin, the Global Chief Operating Officer of LVMH Perfumes & Cosmetics, visited the Xinzhuang Industrial Zone again and stated, “Currently, all online business of LVMH’s beauty products has been transferred to the Xinzhuang Industrial Zone. The group is very optimistic about the development prospects of the Chinese market and will continue to increase innovation investment to achieve long-term goals in China.”
While facing challenging adjustments in the Chinese market, difficulties and challenges coexist. According to Tianyancha, since November this year, LVMH Perfumes & Cosmetics has filed lawsuits against several individuals in China for embezzlement, indicating internal management challenges at LVMH Perfumes & Cosmetics.
From the perspective of the LVMH management, the growth obstacles of LVMH’s perfume and cosmetics business in China lie in “parallel imports,” where foreign-produced (non-counterfeit) products are imported into the country without the consent of the intellectual property rights holder, including what people commonly refer to as daigou.
“We have found that brands heavily reliant on the Chinese market like Guerlain are not performing well, but they show strong performance in other markets. Therefore, while we see growth in the perfume and cosmetics business every quarter, the main challenge lies in the parallel market in China (unofficial channels). It is crucial to exit this part, but it is a painful process,” said Cécile Cabanis, CFO, during the analyst meeting after the release of the third-quarter financial report this year.
“As for Dior’s makeup and perfume business, we have completed the exit, but Guerlain and Givenchy (makeup and perfume) are still in progress,” Cécile Cabanis added.
Whether in the Chinese market or globally, LVMH’s beauty segment is undoubtedly facing an unprecedented historic moment, and the “button” to initiate this transformation still rests in the hands of Bernard Arnault, the 75-year-old head of the LVMH group.
