WHEN: Today, Friday, July 26, 2024
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC exclusive interview with LVMH Chairman and CEO Bernard Arnault on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Friday, July 26 from Paris. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2024/07/26/lvmh-ceo-on-olympics-sponsorship-want-to-show-france-as-a-creative-refined-craftsmanship-country.html.
All references must be sourced to CNBC.
PART I
ANDREW ROSS SORKIN: We talked about it a little bit earlier. I sat down in a rare and exclusive interview in Paris with the chairman and CEO of LMVH, Bernard Arnault, someone who has not sat down for a TV interview in years. LMVH, a premium sponsor of the Olympics. It’s the first deal of its kind for the luxury brand. And the empire of LVMH is truly everywhere here. The medals made by the company along with the opening ceremony uniforms worn by Team France, tonight, the champagne served inside the stadiums as well. And we met Arnault at the company’s flagship Dior Store and our cameras were the first ever allowed inside the original salon of Christian Dior. I started that conversation by asking Bernard Arnault to share the significance of where we were.
BERNARD ARNAULT: And it’s here that started the whole story of Christian Dior for his fashion company. And when I bought Dior, a few years later, because Mr. Dior started in ’47 and he died in ’57. So he became the most well-known designer on the planet in only 10 years, without Internet, without anything. He had the cover of every magazine. I remember the Time cover. You know, it’s a great success, immediate success. And he started here, where we are. This is, by the way, his desk. That’s the desk of Mr. Dior. He was drawing on this desk.
SORKIN: Wow.
ARNAULT: And what we tried to do is to rearrange this room according with his taste. And we tried to buy back some things he had himself, like some nice paintings, nice furniture. And to reserve this for our best partners, our customers. And we may have lunch in the other part of the room. And it’s full of history. And each time we have guests here, as myself, I am still fascinated by all this.
SORKIN: What is now becoming an LVMH Empire started with Christian Dior when Arnault acquired the company in 1984. And I asked Arnault about where his fascination with that brand came from.
ARNAULT: It started when I was a kid because my mother used Dior perfume. And she said, Dior fascinated me. And it was Diorissimo, which is still part of Dior perfume. And when I arrived in the U.S., the first time I went in the U.S., in ’71, it’s when I understood the power of the name. I arrived at the Kennedy Airport, and I went in a cab. And I was starting to talk with the driver. And the driver told me, I like France. I said, good, do you know France? Do you know the French president? Because he spoke also of the U.S. president. It was Nixon at the time, and he did not like him very much. So I said, do you know the name of the French president? It was Georges Pompidou, who was a fantastic French president at the time. And he told me, no, I don’t know the French president, but I know Christian Dior. I said, well, it’s at this instant that I understood the power of the name.
SORKIN: The deal for LVMH to become a premium sponsor of the Olympic Games took a year of negotiation. I asked how all this came about and what it means for the company.
ARNAULT: First, we have been always close to sport, because sport has values that we share. In the group, with my family, and with many of our designers, we have been very close to sport in general. And when we were asked about participating and helping to finance the Olympics, first we reflected, because it was a huge amount, we said, on one hand, it’s France. We are part of the French industry, the French culture. And so we said, as we are the number one French company, we cannot avoid helping that. But it has to have a sense. We are just not going to give money and say, OK, you thank us, but that’s it. We wanted to find a way to show through the Olympics to the world that France as itself is a creative country, is a refined country, is a craftsmanship country. It’s why we tried before agreeing for doing this, we tried to find a way with the Olympic Committee to find a way to be able to show maybe something that has never been done before with the Olympics, which is part of the spirit of a country that we show. And it’s the reason why you will see our — some of our creation, like the medals, like the trunk that brings the flame, that the plateau that we will use, the Olympic organization will use to give, to present the medals to the winners. Like in tonight’s opening ceremony, you will see very beautiful dresses done by Dior and other houses. And this is a combination. It’s, I think, a fantastic way to show that France is special. And not only are we doing this craftsmanship evocation, this creativity presence, but also it shows that investors can go to France. It’s a goal of the meeting I’m going after this one with the French President, to show that, OK, France, you have wine, you have champagne, you have cognac, you have the most beautiful dresses. Christian Dior is still the most well-known name — French name in the world. But we are also attracting modernity. We are attracting the best worldwide company. I think for lunch with the president, I should be next to my friend Elon Musk.
SORKIN: Elon Musk. So you’re going to be sitting with Elon later today.
ARNAULT: Yeah, yeah. I have been told that we will sit together at the official table with the president.
SORKIN: You’ve met him before?
ARNAULT: Yes, I know him. Yes, I know him for some time. Yeah.
SORKIN: What do you guys talk about?
ARNAULT: You know, I admire very much what he’s doing because I think he’s a genius. To do such a success with a car company was quite unexpected. But he’s a genius. And doing so — being so successful with his rockets is incredible. And so we talk about our different businesses. I know also his mother, who is interested in fashion. And last time we discussed about one idea, which is a rocket. Maybe we have a way to put Vuitton in a rocket. I don’t know if we go somewhere.
SORKIN: A Vuitton rocket. Yeah, would you clad the outside of the rocket with the Vuitton?
ARNAULT: Maybe the inside. I don’t know. We have to — we have to think. He did not say no.
SORKIN: Right.
SORKIN: So, alright.
SORKIN: By the way, are there other —
ARNAULT: But I’m afraid he will ask me to go with him in the rocket.
SORKIN: Would you go on the rocket?
ARNAULT: I’m not sure.
SORKIN: You’re not sure.
ARNAULT: No, no.
SORKIN: Maybe we’ll see a Louis Vuitton rocket, a SpaceX-Louis Vuitton collab as they say. Meantime, Arnault known to pay attention to every detail, I asked him about his sense of being an entrepreneur and basically, by the way, every Saturday morning, guys, he walks through the stores and literally he touches the goods, he looks at the shoes of the folks working at the store and he asks them questions. But — and that’s really the magic of all of LVMH. Everybody says that. But I asked him basically whether that was something that he thinks he was born with or something that can be learned and it’s an important issue given that succession question.
ARNAULT: Both, both. I think I was born with that, because when I was a kid, my grandfather and my father, they were entrepreneur. They were builders. So I remember every week going with them on the plant they were building, and looking with them at the detail of what they were doing. And, now, I go to my shops, see the product, see the teams —
SORKIN: Right.
ARNAULT: — and I like it a lot.
SORKIN: Right.
ARNAULT: And I tried to bring my kids with me.
SORKIN: Arnault is 75 years old, and there is as I said much speculation about the succession plans. I asked him what he’s trying to teach each of his next generation Arnaults, which are all, by the way, running different parts of the business and which of his five children might one day take it over.
ARNAULT: First, I must say, I think I was successful to learn them to like working, which is not what all of my friends, some with also big companies and, some money do. And I am very proud of that and because not only they now work with me, but when they were young, I told them if you want to be successful in life, you have to do to start with good learning curve, and you should attend the best schools, which they did. And instead of going in parties or in night clubs, like some do.
SORKIN: Right.
ARNAULT: I’m not saying — said they don’t do that, they do that, but they were working. And now what I think it’s — it’s — you know, it’s Albert Einstein who said that a genius is a 5 percent of high intelligence and 95 percent of work. And I agree with this.
SORKIN: One of the things I was going to ask you that relates to that, though, as a father, is it hard to even have to think about this issue?
ARNAULT: No, I like to work with them. It’s fun.
SORKIN: Right.
ARNAULT: You know, and, when I try, I teach them a lot of things. I think they try to be part of the culture. You know, more globally, what I say also to the group in not — it is not a normal society anonym. It’s a family company. Not only because I control it with my family, with my kids, but also, it’s a spirit. So, when you enter — and it’s why we retain people very long. When you enter LVMH, you don’t enter an anonymous company, you enter a family. So you become a member of the family. And it’s why the best designers, we’ll retain them. But for many years, you know, you see some designer going from one place to another, but we keep them for a long time. Nicolas Ghesquiere at Louis Vuitton, Maria Grazia at Dior, Jonathan Anderson at LOEWE. — we worked with him for very long time. All these designers, we keep them. And it’s like a family. It’s a spirit we try to put, not only in the real family, but in the company family.
PART II
ANDREW ROSS SORKIN: Welcome back to “Squawk Box” live here in Paris, ahead of the opening ceremonies of these Olympic Games. And just yesterday, in a rare exclusive interview, I sat down with the Chairman and CEO of LVMH, Bernard Arnault. LVMH, of course, the premium sponsor of the Olympics and it’s the first time ever a luxury brand is sponsoring the games. The empire of LVMH truly everywhere here. You can see it all over, from the medals to the opening ceremony uniforms worn by Team France tonight, the champagne served inside the stadiums. And I asked Arnault about the connection between luxury and sport.
BERNARD ARNAULT: I think it’s not mainly to show the brands. It’s to show the spirit, the spirit of our group and the spirit of the country. It’s — in sport, mentality is very close to mentality. We try to create and to grow in our group. We try to elevate. We try to surpass ourselves. We try to be number one. And that’s a very sporty attitude. And in the meantime, we try to have a good relationship with the competitors even if we are number one. Also, it shows that France is at the center of all this. And our group is French, it’s very French, and we show the power of this country in the world.
SORKIN: Arnault, who is out and about at a big gala last night, also looking forward to a number of big competitions. He’s going to be in the stands. Said he’s looking forward to seeing a number of games and talked about it here.
ARNAULT: I would watch the most I think watch event, like, the 100-meter run, some of the swimming competition, especially, with the sports we work with. And I will look at golf, at tennis. I hope Nadal is playing. So I hope — I hope he will be successful. And, you know that Carlos Alcaraz also is Vuitton, the tennis man. I have many, many competition to watch.
SORKIN: Joe and Becky, at one point in the conversation we got into a discussion about how Steve Jobs had once asked Bernard Arnault for advice on how to create Apple’s retail experience. This was long before there were ever anything called an Apple Store. And I asked him about that conversation.
ARNAULT: I remember when we discussed this. And he was thinking of doing to start the Apple store. And he asked me, what do you think? I told him, because we were not competitors, if you want to do something like that, which I think may be successful, you should put the first store in the best location. And maybe I will give you some ideas where you can follow Vuitton. And he was quite — quite interested. I think he listened. And one of the first ones he did, I remember, was in Tokyo, just in front of our shop on Ginza. And it proved to be a fantastic success. When, at the time, many of his competitors, I remember Dell, for instance, saying it would never work, these direct shops.
SORKIN: Michael Dell was saying it would never work to do retail, right?
ARNAULT: Yes, he said that. And on the contrary, it’s a big success. It’s actually one of the reasons of the enormous, gigantic success of Apple. And we discussed also business in general. He was very smart, obviously, and very creative also. But he told me, you know, I like your products. And you have an advantage on me. I said, well, which one? I don’t know if my iPod will still be successful in 10 years. But what I know is your Dom Perignon will be sold in a century. So it’s a difference. No, it’s a longevity. It’s a difference also between some tech companies, which I admire because I love tech, and what we do. Our products are here, not for the eternity, but for a very long time.
SORKIN: Given all the headlines we’ve been reading this past week about the challenges facing the luxury sector, we spoke about that and also the global uncertainty and discussed the political climate both here in France and the United States.
ARNAULT: That’s true. We are in a period where there is a lot of uncertainty on geopolitical grounds in the world, with some wars, some economic problems with inflation, with interest rates, and so on. But I am still quite optimistic long-term because the reason why we have been successful and many of our competitors of high quality were successful during the last 30 years is the growth in buying power in the world. And that trend, mid-term, will continue with ups and downs. We have seen ups and down. Since I am in business, since 1994, I have seen many crises. Many, many crises. It’s up and downs, but the global trend is still steady, you know, and I think it will continue.
SORKIN: When people say that the stakes are even higher than ever today, or that there’s even more uncertainty today, do you believe that?
ARNAULT: People very often regret the past, you know, and I tend to think to the future. So you should take information, you should take lesson from the past, but the not always apply to the future. So what will happen, for instance, to the relationship between the U.S. and China, which is a big concern, you know. We hope that a solution will be fine to live in peace and to cooperate, you know, even with the differentiation of culture, of a policy and so on. And I think the people in both countries, they want to see their welfare go up and it cannot be with too stiff competition. We should find a way of finding good way, a good solution to live in peace as it has been for the last —
SORKIN: Do you feel confident about that? You feel optimistic though?
ARNAULT: I think — yeah. I don’t think we will enter an era of big wars, like some people are predicting, a new world war in the next few years because of what happened in Ukraine. I don’t believe this. I think at the end, people are wise enough to avoid it. And we will see.
SORKIN: Arnault had an optimistic note that he doesn’t believe wars are in the offing, and hoping that the U.S.-China relations will get better. Meantime, though, the weakness of the Japanese yen sending LVMH’s coveted Japanese consumers to Japan buy LVMH goods at a discounted price, so much so that Asia sales excluding Japan were down 14 percent for the quarter. And I asked him how concerned he was about what’s happening in the Asia market.
ARNAULT: It may have an impact on the profitability of one year, which is a case for instance this year, but it does not matter because if you are too much on the money side, what are you going to do? And so, okay, sales are not going as fast. So we will lower prices. We will lower quality. And, instantly, I know what we could do to instead of having around flat sales for the first semester, we could have had 20 percent growth quite easy, you know? You —
SORKIN: Quite easy, how?
ARNAULT: Quite easy, how? In reducing some prices.
SORKIN: Oh, I see.
ARNAULT: In doing things — too many shops. Going to discount shops, which some competitors are doing, by the way. But long term, it’s a disaster. So, no, we never do that. Or selling your perfume in the, for instance, in Asia.
SORKIN: Yeah.
ARNAULT: You can sell much more if you discount the price and you sell in duty-free which duty free immediately send back to China at discounted prices. But it’s for the image of the brand, for the long term, you should — we — what I say to my team, we stick to quality. We continue to invest in communication and image. And, we are not going to modify our price policy because our products are desirable. And what you — you are — you should be motivated to do is to continue, and eventually increase desirability.
SORKIN: You’ve made so many acquisitions over the years.
ARNAULT: Yeah.
SORKIN: Is there anything out there just even conceptually that you say those guys are clever, I really admire what they’re doing and, and at some point, they should be part of this family?
ARNAULT: Yes. I admire some of my competitors. Absolutely.
SORKIN: So, who do you like?
ARNAULT: Some — some — some are doing very well, but I will not give you names because it will trigger lot of problems.
SORKIN: True.
ARNAULT: So, no, I cannot tell you.
SORKIN: Can I ask about Richemont? Because everybody reads these headlines about you buying a stake in Richemont.
ARNAULT: Yeah.
SORKIN: What’s the long-term ambition there?
ARNAULT: I know. Well, the owner, Mr. Johann Rupert of Richemont and we have a good relationship, and I told him that I will never do anything against him.
SORKIN: Right.
ARNAULT: That’s clear. And, if I bought some shares, it’s just my portfolio manager put some shares, but it’s a very minor stake.
SORKIN: Right.
ARNAULT: And I just — I am very happy. I think he has done something fantastic with Richemont, with Cartier, with Van Cleef. And I think he is independent. He wants to stay independent. And I agree completely on that.
SORKIN: Bernard Arnault ending some of the takeover speculation just there on whether the company would want to buy Richemont. I think he probably would love to buy it, but clearly saying that that’s not in the cards at least right now. We’re going to hear a lot more from Bernard Arnault in the next hour.
PART III
ANDREW ROSS SORKIN: Joe, here in Paris, we’ve been hearing all morning from the chairman and CEO of LVMH, Bernard Arnault. LVMH, of course, the premium sponsor of the Olympics. It’s the first deal of its kind for luxury brand and Arnault acquired the original crown jewel, Christian Dior back in 1984, since built an empire worth more than $320 billion. And I asked him at how he thinks about the future of this company.
BERNARD ARNAULT: You know, in doing what I do for a long time now, every morning when I arrive in my office, I have fun. So I want to continue to have fun, such —
SORKIN: What’s the most fun part for you?
ARNAULT: Very simple. So, so, fun part is to be able to work with creators, whether it is designer, fashion designer, whether it is creators of big innovation in terms of tech also, and to see how this creation can be sold all over the planet, you know. And because it’s a mix between the high power of creativity, which is often completely disorganized, and the capacity you may have to organize very well the process of selling these products that people want all over the planet.
SORKIN: What is that you think that you do — you have done to consistently recreate brands, often taking brands that may even feel tired and finding ways to remake them? What is that? What is that that you have managed to figure out?
ARNAULT: I think it’s a combination between the products, the image, and the people. And it’s really very delicate combination, for the success of which you have to be passionate. It cannot be done overnight. And when you have for a brand, like for instance, Louis Vuitton, or Christian Dior, you should stick to it, whatever happened, you stick to it. And the goal is not — is not, it’s what I say to my people, to make money.
SORKIN: It’s not to make money.
ARNAULT: No. The goal is to increase and continue desirability of what you do long term. That’s — that’s the goal. And I say all the time to my teams, don’t think of money. Profitability is a consequence of the desirability that you create, that we create together or your brand.
SORKIN: A lot of lessons in the words of Bernard Arnault. And I got to tell you, guys, the reverence that the other CEOs around the world have for Bernard Arnault was remarkable. Just last evening at this gala that opened it that he hosted along with Brian Roberts, of course, runs Comcast, our parent company, the number of well-wishers and folks who were just besieging this man to thank — not just to thank him for the party but to gain his wisdom and almost touch him was unbelievable.
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