New York
Bernard Arnault, chairman of LVMH, has thrown in the towel. This week he announced that he had sold a majority share in Phillips de Pury Luxembourg, after losing millions of dollars in a high-octane, high-risk strategy to challenge the traditional Big Two by creating a top-end, niche auction house.
He had created the firm just over a year ago, by merging Phillips (which he bought in 1999) and the art dealership Simon de Pury and Daniella Luxembourg.
Since then, Phillips de Pury Luxembourg has been paying lordly sums, both to buy whole collections for sale at auction and to woo senior specialists from Sotheby’s and Christie’s. This strategy cost it some £82 million last year, and coupled with a drop in the luxury goods market, the losses were impacting drastically on LVMH. Its balance sheet shows that “other activities”, which includes Phillips, made a loss of f372 million (£227 million; $317 million) last year.
Now Simon de Pury and Daniella Luxembourg, who already owned 25% of the auction house, have bought a majority stake of 72.5%, thanks to the personal fortune of Mr de Pury’s girlfriend, Louise MacBain. She becomes ceo of the company.
“We will continue to implement the vision we shared with LVMH, of creating a boutique style auction house focusing on the top end of the market,” Mr de Pury told The Art Newspaper. “The first year was the investment phase, with Phillips repositioning itself in seven or eight categories. We have successfully bought market share and broken artists’ records. Now we will continue with the same structure and build on the same team of about 120 staff”. While he confirmed that the firm would still offer guarantees, they will not be “at the same level” as in the past.
Mr de Pury declined to say when he thought the firm would become profitable, just saying, “We are well capitalised and we have no debt on our balance sheet”.
Mr Arnault’s retreat is nevertheless a tremendous loss of face for the chairman of LVMH, who was once thinking of buying Sotheby’s. This now seems unlikely, although he retains ownership of the Paris auctioneer Tajan, 49.9% of Bonhams and the art magazines Connaissance des Arts and Art and Auction.
Along with his withdrawal from fine art sales, Mr Arnault has also given up on his struggling internet investment company, Europ@net, and is seeking to sell the cosmetics chain Sephora and the duty free group DFS.