LVMH (LVMHF) founder and CEO Bernard Arnault decided to expand his horizons by steering away from the luxury aisle to go shopping in the Artificial Intelligence world.
Due to the slowdown in the company's luxury sales and Arnault's shrinking net worth, this drastic market change may be an effort to salvage the almost four-decade-old company.
Related: Dior pays a startling low price to produce a $2,780 handbag
LVMH owns brands in all sectors of the luxury industry, including wine and spirits, fashion, perfumes and cosmetics, jewelry and watches, retail, and more.
The company's extensive portfolio includes prestigious names such as Louis Vuitton, Dior, Fendi, Givenchy, and Loro Piana, to name a few, and retail brands like Sephora and Le Bon Marché Rive Gauche.
Bernard is a majority shareholder and has led LVMH since 1989; the Arnault family owns 48% of LVMH and has 64% voting power.
LVMH's turbulent sales in the first half
According to the luxury group's first-half financial report for 2024, revenue was down by 1% compared to last year, and the net profit decreased by 15%.
As for the breakdown of its luxury Maisons, wine and spirits revenue is down by 12%, fashion and leather goods is down by 2%, and watches and jewelry is down by 5%. But despite the decline, perfume and cosmetics is up by 3%, and selective retail is up by 3%.
Overall, LVMH's stock is down by 10.8% compared to last year.
Recent AI investments amidst LVMH's declining sales
Recently, Arnault made multiple investments in AI through his tech firm called Aglaé Ventures, and in 2024 alone, the CEO made five big investments.
Although the exact investment amounts have yet to be disclosed, they are said to total more than $300 million.
The AI startups Arnault invested in include the French startup H (formerly known as Holistic AI), the California-based startup Lamini, the New York-based AI-powered digital marketing company Proxima, the Toronto-based AI HR platform Borderless AI, and the French-based AI image editor Photoroom.
Although most of Arnault's investments were made this year, he has previously made a couple of AI investments between 2017 and 2019.
Related: Sephora makes major expansion move to take on Ulta, Target
Is Arnault investing in AI in hopes of growing his fallen net worth?
In 2023, Forbes named Bernard Arnault the richest person in the world, with a net worth of approximately $211 billion. Currently, he stands in fifth place for the title, with a net worth of around $190.7 billion.
Although Arnault is still among the world's top 5 richest people, his net worth has decreased by 9.6% since last year.
More Retail:
- The charts of LVMH look lackluster
- We're adding to and rounding out our Coty position
- Ulta CEO rings the alarm on a growing trend
Arnault's dabbling into the startup tech world is nothing new; he previously invested in Netflix during its infant years in 1999, Spotify in 2014, and ByteDance, a TikTok parent company.
At the 2024 LVMH Innovation Awards, Arnault said he invested in 75 startups in the 1990s because he believes in the entrepreneurial spirit and a forward-thinking mindset.
At this year's VivaTech, in which LVMH is a founding partner, the company showcased its innovations with the help of AI startups to stay on-trend with the future of luxury.
Dior presented its AI platform Astra, which compiles its customers' comments and reviews from multiple channels so the brand can easily identify trends and monitor consumer behaviors.
Loro Piana presented Silhouette, a digital fitting room powered by AI where customers can virtually try on the brand's clothing to find fashion pieces that best suit their style and complexion.
Related: Veteran fund manager picks favorite stocks for 2024
