LVMH and Kering talk about state support for jobs

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LVMH and Kering, the world’s largest luxury goods groups, told their employees that they would be placed in an emergency government assistance program, but then backed down after their youngest children rivals Hermès and Chanel are committed to coping without state support in a spirit of “national solidarity”.

Internal emails and documents reviewed by the Financial Times show that shortly after France locked out on March 15, LVMH began placing some workers under the so-called “partial activity” regime. government in its various companies.

The program, the centerpiece of France’s emergency efforts to support its economy during the coronavirus, allows companies to reduce working hours or lay them off while the state finances most of their salaries in order to avoid mass layoffs.

Employees of Louis Vuitton, LVMH’s largest brand representing nearly half of the group’s operating profit, and beauty product retailer Sephora were among those who were informed in March that they would be enrolled in the program. government – to have the decision overturned last week.

Similar events took place at Gucci owner Kering. A union representative from Boucheron, a watch and jewelry brand, said in an interview that three meetings had taken place in recent weeks on the placement of staff under the “partial activity” program. But on Monday, the union was informed that the plan would not come to fruition, said Yannick Blaise, a CFDT representative in Boucheron.

The use of state aid has become a thorny issue for some of the biggest French companies, as asking for help risks once turning internal issues such as executive salaries or dividends into questions of public debate.

Some, like Total and Société Générale, have promised not to use the partial activity regime so as not to weigh on public accounts. To date, some 473,000 companies have requested assistance to cover the costs of some 5 million workers, including Airbus, Renault and Air France-KLM, at a cost of more than 11 billion euros to the state.

In luxury, the equation is complicated by the fact that LVMH and Kering are controlled respectively by the wealthiest and third-wealthiest men in the country, according to the ranking of Forbes magazine.

The two billionaires, Bernard Arnault of LVMH and François-Henri Pinault of Kering, are fierce competitors and leading figures in France whose movements are closely examined. The two have donated money and resources to the fight against Covid-19 in recent weeks, with LVMH being praised for converting perfume factories into a hand sanitizer for health workers.

Workers at the Sephora beauty store were among those announced in March that they would be enrolled in the government program – to have the decision overturned last week © Etienne Laurent / EPA / Shutterstock

Jenny Urbina, CGT union representative at Sephora, said the company had told its employees that its reverse decision not to rely on the regime would apply to LVMH, except in its newspapers Les Echos and Le Parisien.

“I think they went ahead too quickly and didn’t think what it would be like, and were caught when the competitors made their announcements,” she told the FT.

“While we are happy that the company did this, we at the CGT thought it was scandalous that LVMH wanted to ask for help from the state. These programs are meant to help fragile businesses and workers who really need them, not large profitable businesses. “

Chanel, which is a private, family-owned business, said on March 28 that it did not intend to use the “partial activity” assistance program at this stage of the crisis. “Our objective is not to weigh on public accounts so that the French State can prioritize aid to the most vulnerable companies, and concentrate its resources on the health system and its doctors and nurses,” he said. he said in a statement.

Hermès, also supported by the family, went further on April 1 by promising to maintain the salaries of its 15,500 employees worldwide, and not to shrink from any “partial activity” during the duration of the crisis.

An LVMH spokesperson said the company is not used to making decisions based on the actions of its competitors. Kering declined to comment.

Additional reporting by Domitille Alain

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