Following a boom in the luxury sector that has catapulted his net worth and the value of his conglomerate LVMH (LVMHF) to new heights, Bernard Arnault is going shopping. The CEO behind brands like Louis Vuitton, dior (CHDRY) and Tiffany & Co has been snapping up commercial real estate properties across Europe and the U.S. in a bid to further expand his empire.
But he’s not the only one. Kering, the luxury conglomerate founded by Francois Pinault that encompasses brands like Gucci, Saint Laurent and Bottega Veneta, is following the French billionaire’s lead. Both LVMH and its primary competitor have spent billions on new properties in recent months, all the while pushing one of the largest feuds in corporate history back into the spotlight.
Arnault, currently the world’s second richest person with an estimated net worth of $236 billion, quietly picked up a $22 million property in East Hampton earlier this year. At 5,000 square feet, the acquisition represented the largest ever price-per-square-foot commercial real estate transaction in the Hamptons, Suffolk County or Nassau County. Located on the busy corner of Newtown Lane and Montauk Highway, the two-story building was previously owned by designer Elie Tahari and later leased by Cartier before it was purchased by LVMH in April, which plans to utilize the space as a Louis Vuitton boutique.
The month prior, an LVMH affiliate also expanded into Beverly Hills. A 14,000-square-foot retail property located at 357 N. Beverly Drive sold for $43 million in March, according to CoStar, which reported an entity tied to Barack Ferrazzano, a real estate firm representing LVMH, as the buyer.
LVMH’s most notable real estate transactions have occurred in Paris, where the luxury behemoth is headquartered. Earlier this month, Arnault reportedly shelled out between 770 million euros ($865 million) and 900 million euros ($1 billion) to purchase the Louis Vuitton flagship store at 101 Avenue des Champs-Elysées. Commissioned in the 1920s by the son of the eponymous founder of Louis Vuitton, the seven-story building totals 101,000 square feet and recently underwent renovations. Three other Parisian properties totaling at 300,00 square feet, located at 22 Avenue Montaigne, 7 Rue de la Paix and 12 Place des Etats-Unis, have also been acquired by LVMH for more than $300 million euros ($337 million), according to a report from real estate consultancy Knight Frank.
Closely following LVMH’s move is Kering, which plans to open a new Gucci flagship store across the road from Louis Vuitton’s Champ-Elysees location. The 25,000-square-foot boutique will reportedly be housed in four new buildings acquired by Kering in February for 300 million euros ($337 million), located at 235 Rue Saint-Honore and 12-14 Rue Castiglione.
Earlier this year, Kering purchased two other Parisian buildings on 35-37 Avenue Montaigne for 1 billion euros ($1.1 billion) from British businessman Adrien Labi. The acquisition once again represents a challenge to LVMH, with one of the properties earmarked to become a Saint Laurent store directly across from the headquarters of Dior.
Why are Bernard Arnault and Francois Pinault rivals?
As the founders of two of the largest names in luxury goods, Arnault, 74, and Pinault, 86, have long been in direct competition with each other beyond real estate properties. Known for his aggressive tactics in the fashion world and nickname of the “wolf in cashmere,” Arnault’s rivalry with Pinault stems back to 1999 when he posed a takeover threat to Gucci.
Arnault had acquired a 34 percent stock in the luxury brand, which at the time was run by Domenico De Sole, and later offered to buy the company for $8.7 billion. To wade off the LVMH head’s threat, De Sole struck a deal with Pinault, giving him 40 percent ownership and diluting Arnault’s stake in the company. Despite embarking on a years-long legal battle over Gucci known as “the war of the sharks,” Arnault eventually agreed to sell his shares, with Pinault later acquiring majority ownership of the brand.
The rivalry between the two luxury tycoons, which was even covered in the HBO Max miniseries “Kingdom of Dreams,” has continued since then, with Arnault and Pinault closely following each other’s business moves. They both own competing wine estates in Bordeaux, which contains both LMVH’s Cheval Blanc and Kering’s Latour. In 2017, Pinault acquired a Burgundy vineyard located next door from one owned by Arnault. The LVMH head even purchased Phillips in 1999 to compete with Pinault’s ownership of Christie’s, although he later sold the auction house in 2003.
The French businessmen also share a love for art. Pinault began ceding his empire to his son Francois-Henri, who is additionally known for his marriage to actress Salma Hayek, in the 2000s in order to focus on bolstering his collection. After his plans to build a museum in Paris were halted over environmental and legal issues, Pinault, the world’s 36th richest person with an estimated net worth of $37.4 billion, opened two galleries in Venice instead.
However, he was later one-upped by Arnault, who in 2014 launched the Louis Vuitton Foundation, a museum housing his private collection in France’s capital. Pinault eventually fought back with the 2021 opening of the Bourse de Commerce, investing 108 million euros ($121 million) to turn a Parisian building into a museum showcasing his thousands of works.
Even philanthropy has become a source of tension between the two billionaires. After the 2019 Notre Dame fire, Pinault pledged $112 million to help reconstruct the French landmark. Hours later, he was overshadowed by Arnault, who doubled his pledge to $224 million.
Despite competing for dominance in the luxury world, Arnault and Pinault have joined forces on occasion. In 2009, the two billionaires reportedly attended the same lunch at the behest of former French president Nicolas Sarkozy. And six years later, LVMH and Kering teamed up to announce a charter providing protections for models. In response to allegations of abuse and unhealthy weight standards, both conglomerates banned models under size 0 and aged 16 or younger from working with any of their brands, in addition to providing psychologists on call for models during working hours.
But that went sour. In a sign that their rift will likely continue on into the next generation, the sons of Arnault and Pinault spoke for their family companies as joint support of the charter crumbled. In 2019, Kering decided to also ban models under age 18 from working with their companies. “We believe that we have a responsibility to put forward the best possible practices in the luxury sector and we hope to create a movement that will encourage others to follow,” said Kering CEO Francois-Henri of the news. Arnault’s son Antoine, then the head of communication at LVMH, quickly made his opposition clear. “We are sticking to our position,” he said at the time. “We will not be following suit.”
