Tuesday, October 19, 2021

LVMH Making Billionaires, Richest– First Arnault, Now Rihanna

Rihanna is now officially a billionaire and it’s not her music career to be credit.

Highlights:

  • Rihanna is now the richest female artist in the world as her net worth surpassed $1.7 billion.
  • $1.4 billion of her wealth flows from her stake in her joint venture with LMVH, Fenty Beauty.
  • She invested “in-kind” contributions in the company- her name, personal brand, effort, time.
  • LMVH growth recently also made its Chairman and CEO, Bernard Arnault, the richest man in the world.

Robyn Fenty, better known to the world as Rihanna, started her own beauty brand Fenty Beauty in 2017 with the aim of creating a cosmetics company that made “women everywhere (feel) included.” And one of the possible unintended consequences of that aim is a shoot in Rihanna’s net worth winning her an entry into exclusive billionaires club, thanks to the latest entrepreneurial streak instilled in the music artist.

With a current worth of $1.7 billion according to estimates of Forbes, Rihanna is now the wealthiest female musician in the world, second only to Oprah Winfrey as the richest female entertainer. 

However, it is not her music that has helped her become a billionaire. A majority of her wealth, about an estimated $1.4 billion of it, has flown from the market value of Fenty Beauty, of which Rihanna owns as much as 50 percent. And a large portion of the rest of her wealth comes from her stake in her lingerie company, Savage x Fenty, which is estimated to be worth $270 million.

The rest is from her earnings from her career as a chart-topping musician and actress.

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What Made Rihanna a Billionaire? 

The investment “in assets” made by Rihanna in Fenty Beauty, under the umbrella of LVMH, has been instrumental in making her the second richest woman musician in the world. Being the part of LVMH groups, Fenty beauty products sell like hot cakes at Sephora, another subsidiary of the French luxury conglomerate.

LVMH does not provide break up of sales performances of brands separately in its quarterly reports. However, the behemoth has repeatedly said that Fenty Beauty, that initiated with a $10 million valuation, continues to grow. The company expanded into the lucrative cosmetic space last year.

According to the latest estimates by Forbes, Fenty Beauty’s market value is now at a “conservative $2.8 billion,” and since Rihanna owns almost half of the company – her personal wealth from the venture was at about $1.4 billion– which shot her into the elite league of billionaires. 

Reports suggested that Rihanna owns another $270 million of her net worth from her lingerie company, Savage x Fenty, which has been successful because of its greater inclusive approach compared to the firm’s other established rivals. The company is supported by a number of investors including L Catterton, the private equity firm partly owned by Bernard Arnault, CEO and majority shareholder of LVMH.

While the partnership between Rihanna and LVMH has, in general, been profitable for her net worth, the full-fledged luxury fashion brand launched by then in 2019 has not been a success. Both the partners announced in February this year of pausing the venture. 

 

LVMH– World’s biggest luxury brand is billionaire’s goldmine 

It is not only Rihanna, LVMH has also catapulted its Chairman and CEO of the group, French billionaire Bernard Arnault, to become the richest person in the world earlier this week. With this push, Arnault entered the coveted list of a handful “centibillionaires” as he added more than $100 billion to his net worth since 2020. Arnault’s current net worth is about $198 billion.

His rise to become the wealthiest person in the world, replacing Amazon Founder Jeff Bezos at the top of the list, was possible because he is a majority shareholder of LVMH and the recent surge in valuation of the luxury group has helped his net worth to dramatically increase. Arnault is now richer than Bezos by about $300 million, as Bezo’s net worth is about $186 billion and quite a bit wealthier than Tesla CEO Elon Musk, with a personal net worth of $147.3 billion. 

Arnault has been heading the company since 1989 after he became the majority shareholder of the company.

In March of 2020, Arnault’s fortune was $76 billion which increased to $198 billion in just the past 14 months primarily because of a significantly good performance of LVMH even during the pandemic period. In the first quarter of 2021, LVMH reported a 32 percent year-on-year jump in its revenues, at $17 billion.

As of August 2021, LVMH has a market cap of $413.18 Billion. This makes LVMH the world’s 17th most valuable company. This phenomenal rise of the company’s market value has also increased the value of the company’s stocks that Arnault owns. 

LVMH X Fenty Beauty  

The fashion conglomerate LMVH made an investment of about $35 million in cash in the joint venture Fenty Beauty which is equivalent to a total 50.01 percent stake. Rihanna on the other hand also agreed to put in the same amount but in “in-kind” contributions, allowing the company to use her name and personal brand as well as her efforts and time. That made Rihanna the owner of the rest 49.99 percent of the venture.  

Bernard Arnault– the story of world’s richest man paved through LVMH

Born in 1949 in an industrial family in Roubaix, France, Bernard Arnault started his professional career as an engineer with the Ferret-Savinel construction company. He moved up the ranks of the company to become its Chairman in 1978.

During his career, Arnault undertook the reorganization of the Financière Agache holding company in 1984 and successfully returned the group to profitability. This was the time when he embarked on a strategy of development of the leading luxury products company in the world. This strategy included reinvigorating the Christian Dior which became the cornerstone of the new organization.

He became the majority shareholder of LVMH in 1989, thereby creating the leading luxury products group of the world and has since been the Chairman and CEO of the company. He took LMVH to new heights as he implemented a strategy of replacing the old average employees and replacing them with new ones who exceeded his expectations.

In order to build up the luxury group, Arnault acquired a number of companies, including the Marc Jacobs, Sephora, Tiffancy & Co. and Guerlain, among others. 

While Arnault’s becoming the richest man in the world was driven by the high valuation of LMVH which enhanced his personal worth based on the shares of the company, it is reported that he continues to purchase more shares of the group. This shows his own confidence in the luxury giant and the potential of LMVH growing in value further. And the current demand for luxury goods as it rebounded from the pandemic hit, shows that Arnault’s bet on his own company was just right with the possibility that the company will further the personal wealth of Arnault.  

Debdutta Ghosh
Debdutta Ghosh is a Journalist who has been associated with leading media firms of India like Asian Age, Indian Express and Hindustan Times as well as television channels such as Zee News/Business and ABP News as a reporter for more than 20 years. With a Post-Graduation Diploma in Mass Communication & a Bachelor Degree in Science, his expertise as content expert lies in the areas of Business News Analysis, PR, and Marketing Communication.

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