In a demonstration of the fact that the family behind Paris-based design house, Hermès, are tightening the reigns, Axel Dumas, a sixth generation member of the Hermès family, officially stepped in as CEO last month, succeeding Patrick Thomas, the first and only outsider to ever run the company. According to a recent piece by the Wall Street Journal, “Mr. Dumas and his cousins have stepped into the breach in response to LVMH Moët Hennessy Louis Vuitton building up a 23% stake. The family pooled 50% of the company’s capital in a trust to keep it out of the hands of the luxury juggernaut. But LVMH hasn’t signaled any intention of backing down.” And Hermès certainly is not pleased.
You may recall that in July 2012, the house filed a criminal complaint against LVMH in a Paris court, accusing the luxury conglomerate of insider trading, collusion and manipulating stock prices; to this, LVMH filed a complaint against Hermès for “blackmail, slander and unfair competition.” Add to the mix an investigation by the French financial services watchdog Autorité des marches financiers’s Sanctions Committee, which resulted in LVMH being slapped with a $10.4 million fine, and yet another increase in LVMH’s stake in Hermès, and you have an idea of the state of the relationship between the luxury rivals.
In the wake of ongoing drama between the luxury rivals, the Wall Street Journal’s Christina Passariello sat down with Dumas, who spoke about family unity and why price isn’t an indicator of exclusivity, but maybe most interestingly, how he plans to deal with the company’s unwanted shareholder. He initially told Passariello: “We are fighting to keep Hermès independent. It will be the fight of our generation”, certainly a nod to what has been largely characterized by as a takeover plan by LVMH. Although, LVMH Chairman Bernard Arnault has held that LVMH is a legitimate shareholder in Hermès and not planning a takeover.
Here is an excerpt from the interview …
WSJ: Was LVMH’s entry into your capital due to the family being complacent?
Mr. Dumas: It surprised everyone. We are fighting to keep Hermès independent. It will be the fight of our generation. We are a company with 177 years of history. So we’ve seen struggle from time to time. We invested all our money in 1928 to open a store in New York, just before the Great Depression. It was 10 years of trauma for the family thanks to that.
WSJ: Now that you are the public face of the family, what kind of relationship will you have with LVMH?
Mr. Dumas: As a CEO, my role is to grow the company as much as possible, taking into account the global interest of all the shareholders.
WSJ: Including LVMH.
Mr. Dumas: The best benefit they can have is by realizing the capital gain on their shares.
WSJ: So you are encouraging them to sell?
Mr. Dumas: It would create great results that will increase their profit.