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LVMH CEO Bernard Arnault Expands on U.S. Manufacturing Goals — and How Trump Might Help

"I'm more concerned with Marc Jacobs than the U.S. President."
Photo: Andreas Rentz/Getty Images

Photo: Andreas Rentz/Getty Images

All told, 2016 was a good year for French luxury conglomerate LVMH. It surpassed €37 billion in revenue for the first time, an increase of 5 percent over the previous year. Profits were up 6 percent to €7 billion.

But you know that feeling when everything's going great in your life and you're just waiting for something terrible to happen (I don't think any of us have felt this in a while but hopefully you can remember)? Bernard Arnault is feeling that too, and explained that for every 10-year period, there are usually two bad years, which he thinks could be coming up for LVMH, so the company is being extra cautious about expansion.

In the important fashion and leather goods category, growth was led, as usual, by Louis Vuitton. Fendi and Loro Piana also perfromed particularly well. The pain point, as has been the case for some time, was Marc Jacobs, which is still in the midst of restructuring. Asked to expand on the brand's development during the Q+A portion of Thursday afternoon's earnings call, Arnault confirmed the New York-based label was "in the red," saying, "We will pull out I'm sure" and that, as a purely fashion business, Marc Jacobs simply isn't as robust as a "timeless" brand like Louis Vuitton. "When things are in fashion, fine. And when they go out? Not so fine."

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But, like us, several analysts dialed into the company's conference call, were also curious about Arnault's business entanglements in the U.S., and his relationship with our new president, with whom he met in the weeks leading up to the inauguration. "I'm more concerned with Marc Jacobs than the U.S. President," he quipped after one analyst asked him about both.

In his presentation to investors, Arnault confirmed Louis Vuitton's plans to open up a "new workshop" in the U.S., in addition to the facility it's had in San Dimas, California for the past 25 years. He added, "We've been told, if there are problems with tariffs and duties, we'll be able to bypass them."

Asked if and how Trump might help LVMH out in regards to taxes, Arnault explained that by manufacturing in the U.S., the company becomes "quite immune" to any potential lift in border taxes. "I don't have the exact figure, but a large part of Vuitton products sold in the United States are made in the United States," he said. "For the other products, we'll see what happens."

Fielding yet another question about his confidence in Trump's economic policy plans, Arnault cited an article he'd read in the Telegraph, paraphrasing the angle with what I feel confident in saying was just a hint of disbelief: "The new U.S. president is very much criticized but there's the question of... what if it worked?! It could just work!"

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