French tycoons are losing a lot of money

The luxury crisis is affecting not only large groups but also their owners. Following the third-quarter reports of 2024, which reported significant losses for LVMH and Kering, the latest updates from the Bloomberg Billionaire Index highlight the severe blows to the personal fortunes of French luxury magnates. Factors impacting the earnings of the three French luxury titans - Bernard Arnault (LVMH), François Pinault (Kering), and Françoise Bettencourt-Meyers (L’Oréal) - include a decline in Chinese demand affecting their businesses and new taxation policies in France, which have become more pressing for the ultra-wealthy. Data shows that over the past year, French magnates collectively lost $58 billion. Specifically, Arnault’s fortune has decreased by about $26 billion (-13%), bringing it to $181 billion, the largest drop among the world’s top 500 in Bloomberg’s ranking. Arnault, who once held the top spot, has now fallen to 5th place, overtaken by Tesla’s owner, Elon Musk, and other American tech giants: Jeff Bezos (Amazon), Mark Zuckerberg (Meta), and Larry Ellison (Oracle).

François Pinault, founder of the Kering group and ranked 91st on the Bloomberg index, suffered the hardest hit, with his fortune dropping to $22 billion over the last 12 months, a reduction of 13.4 billion (-37.9%). Compared to the peak in August 2021, the fortune of the owner of Gucci and Saint Laurent has seen an even greater decline, totaling -63%. The Kering group continued its negative trend with revenue down 12% to 12.8 billion euros in the first nine months of the fiscal year, with a third consecutive profit warning issued. In particular, Gucci's performance weighed heavily, with revenues down 26% to 1.64 billion euros, particularly affected by market conditions in the Asia-Pacific region. Despite losses exceeding $18 billion, beauty empress Bettencourt-Meyers remains undeterred in the top 20. Also among struggling French billionaires are Alain and Gerard Wertheimer of Chanel. Ranked 30th and 31st on the index, they currently have fortunes of $44.3 billion each, down by 2.8 billion from last year. Chanel, which after its latest collection has undoubtedly shown signs of change, is currently awaiting a new designer following the departure of creative director Virginie Viard last June, despite closing the previous fiscal year with double-digit growth and revenue of $19.7 billion (+16%, 18.2 billion euros).

While the luxury sector continues to experience losses, fast fashion seems to be undergoing a phase of significant growth, marking a stark contrast with high-fashion brands. This phenomenon is particularly evident in the financial data of Inditex, the Spanish giant owned by Amancio Ortega, which includes brands like Zara, Pull&Bear, and Massimo Dutti. Ortega’s fortune has increased by $28 billion over the past 12 months, reaching $116 billion and placing him in 12th place globally among billionaires, steadily narrowing the gap between him and Arnault. Recent collaborations between big fashion names and Zara increasingly suggest that Inditex’s ultimate goal might be to become a true competitor to LVMH. The monopoly of creative directors, Chinese customer insecurity, and the crisis among independent brands are just symptoms of a more profound issue at the core of the industry. Perhaps it was necessary to hit the owners’ pockets to give them a much-deserved “wake-up call”.