Coming Soon From Lvmh: E Luxe

Chief Bernard Arnault is buying up Web stakes

They were unlikely visitors to the Paris headquarters of the LVMH Moet Hennessy Louis Vuitton luxury-goods company: three Swedes with a plan to sell sports apparel from a Web site featuring an electronic salesclerk called "Miss Boo." But LVMH Chairman Bernard Arnault spent an hour chatting with the trio early this year, then opened his checkbook and took a stake in their London-based company, "He likes our style," says's 28-year-old Chief Executive Ernst Malmsten.

Arnault's favorite style is aggressive. A raider whose $7.2 billion-a-year empire includes Christian Dior and Givenchy, the Frenchman now has his eye on cyberspace. Since January, he has put more than $100 million in Web-related startups from London to Silicon Valley, ranging from mortgage lending to flower delivery--far removed from LVMH's gold-plated brands.

RESTLESS. So what's Arnault up to? He isn't saying, and his spokespeople point out that the investments are being made by his Arnault Group holding company, not by LVMH. Arnault may be trying to make a quick buck in a hot business. But he also could be positioning LVMH for a push into E-commerce, where luxury retailers are conspicuously absent. The knowhow he gains from an inside look could give him a headstart.

In many ways, E-commerce is a natural next step for the restless Arnault, 50, who in 15 years built the world's biggest luxury conglomerate from the ruins of a bankrupt textile company. After getting hammered by the Asian economic crisis, he has focused LVMH's efforts on the U.S., where E-commerce is spreading fastest. One of LVMH's recent buys, the beauty-products chain Sephora, is opening 26 stores in the U.S. this year and is gearing up to sell online.

Even some LVMH power brands could get into the act. While the Net can never match the pleasures of shopping in a Fifth Avenue boutique, ordering a favorite item online--say, a Guerlain perfume--would save a shopper time. Designers also could lure customers by displaying collections on the Web.

This may be an opportune time for Arnault to make a move. LVMH profits plunged 29% last year, and Arnault suffered a setback this spring when his bid to acquire Gucci was blocked by his archrival, French billionaire Francois Pinault. But LVMH is perking along now, with sales expected to grow at least 15% this year, to more than $8.1 billion. Although recovery in Asia is helping, analysts say Arnault deserves credit for slashing costs at underperforming units, such as the DFS chain of duty-free shops. LVMH is now trading at $295 a share, more than double its low point last year.

Not everyone thinks LVMH is headed for the Web. Still, the French tycoon has never been afraid to think big and move fast--faster than you can say ""

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