Hermès vs LVMH
Blood lines and a deep independent streak fuel a family's fight for control of a storied French fashion house, writes Jing Zhang
"When my grandmother died she got all her children and she said, Hermès is your land, protect it and develop it," says Hermès chief operating officer Axel Dumas, sixth-generation of the Hermès family, holding court in a beautiful old colonial Shanghai compound. It is the kind of clear, sunny Shanghai day where shadows from leafy trees cast a lovely effect on the boulevards of the French Concession area. Light from the courtyard streams through tinted vintage glass panes into the restaurant where a relaxed 42-year-old Dumas chats with amiable, effortless charm.
And a message for his competitors: control of Hermès is held tightly in the hands of a family related (by blood and marriage) to the founder, Thierry Hermès. Those close-knit values infuse the brand's identity, a spirit that will not be relinquished lightly.
"My mother worked for Hermès for 20 years until she died," says Dumas, who is set to take over the family firm as CEO, following the retirement of current CEO Patrick Thomas - the only non-family member to hold the role - next June.
The primacy of the founding family in the house of Hermès' has become a touchy topic of late. The French luxury conglomerate LVMH does not see it that way. LVMH commands a global empire comprising more than 60 brands such as Louis Vuitton - which accounted for 30 per cent of group sales last year - Moët & Chandon, Loewe, Fendi and Bulgari - its latest acquisition in 2011 - to name a few. Now it appears restless to add Hermès to that stable.
The feud between the two historical French houses began in 2010 when Hermès family members discovered Bernard Arnault, LVMH boss and France's richest man, had personally acquired a 17 per cent stake in their firm.
Arnault is believed to be fascinated by the rarefied quality of Hermès, known for its silk scarves and highly coveted Kelly and Birkin leather bags. He's also enthused by the prospect of the brand's potential with China's next wave of luxury consumers.
Seeking protection from their so-called predator, around 60 Hermès family members set up a holding company with a 50.2 per cent stake in Hermès' shares which they agreed not to sell for 20 years, to block LVMH's presumptive takeover.