Delphine Arnault, the oldest child of LVMH’s chief executive Bernard Arnault, will replace Pietro Beccarri in heading Christian Dior Couture with Beccari becoming CEO of Louis Vuitton, it was announced today.
This follows the announcement that Antoine Arnualt, Bernard’s second eldest, will become CEO of Christian Dior SE and vice-chairman of the board of directors.
The three other children of the world’s richest man all hold high-ranking jobs within the conglomerate including Jean Arnault, who is just 24.
Are such appointments just nepotism or are family members fit for the roles they get?
Similar questions were raised last year when Michael Murray, son-in-law of Mike Ashley, was appointed chief executive of Frasers Group in May.
“Investors might reasonably want to know why Mr Murray is not even on the current board,” said retail analyst Andrew Busby at the time, adding “whether his promotion reflects merit rather than nepotism.”
Yet, it appears Murray, who comes from a real estate background, has excelled.
“Retail has been pretty tough, but the market is warming to his strategy of premiumisation through Flannels and a refurbishment programme” Russ Mould, investment research director at AJ Bell, told Proactive.
A recent return to share prices not seen since 2014 was made even more impressive considering the stock fell to 185p during the pandemic, Mould argued.
“Between 2014 and 2020 the shares were on a one-way trip down amid concerns over governance and the lack of dividends and cash returns.
“Sentiment had turned against the stock and the valuation got very rich” he added.
Frasers Group is currently trading at 743p.
Next is another successful case of keeping it in the family. In 2001, David Wolfson appointed his son Simon as CEO at a youthful 33, but any questions about that appointment have been laid to rest by the retailer’s stand-out performance subsequently.
“He's clearly extremely well thought of in the company, he’s done incredibly well during his tenure.”
Since his appointment in August 2001 Next's share price has risen by 583% from £9.39 to £64.20.
“He seems to still be doing a very good job. He’s taken the company through the great financial crisis and Covid” Mould said.
PWC in a report about family businesses also noted the importance of family to a company’s culture.
“One of the main goals of the family business is not the maximisation of profits, but its longevity and maintenance of what it stands for.”