Last week, the Financial Times published a long article on Prada succession plan, echoing our previous blog: “Family succession plan in luxury” (12/01/2013 deshima.fr). There are two important factors: who and when. 

1-Positioning of family members

Good succession: 

Family members are put early in management positions and can demonstrate their ability to run the business and be operationally respected. Example: Delphine Arnault, daughter of Bernard Arnault, CEO of LVMH has always worked in the key “fashion and leather goods division”:  First at Louis Vuitton where she assumed important responsibilities and since January 2023 as Head of Dior, the second most important brand after Louis Vuitton. In this new position, she will have to show her ability to to grow the top line and gain respect from other top managers within the LVMH group.

Bad succession: 

Lorenzo Bertelli, the son of the Prada ex-CEO, has «been an important adviser to his parents on strategic decisions for years” according to the FT article…Within Prada, he is “Head of corporate social responsibility”, not the best operational job to learn how to run the  business.

2-Calendar of succession

Good: No calendar. 

Bernard Arnault has announced no succession plan keeping options widely opened with his 4 children working in the group in different capacities. Investors understood he wants one of them to eventually succeed him, but they are left with no calendar and no casting…. 

Bad: Vague calendar

Patrizio Bertelli, historical CEO of Prada has been replaced in January 2023 by Guerra ex CEO of Luxottica. Lorenzo Bertelli, his son, said to the FT, that “there was little doubt he would eventually succeed his father. Whether it’s three, four or five years from now, it doesn’t matter. The family and management will recognize when it is the right time”. 

Conclusion

For LVMH, Delphine Arnault has already demonstrated strong capacities at Louis Vuitton which will need to be confirmed at Dior. Lorenzo Bertelli at Prada is a slightly different story. When asked by the Financial Times about his credentials for the top job, the reply flowed “I risked my life when I was driving cars, so that was a different kind of pressure, I always know that if you work hard then the pressure disappears a bit because you know you have done your best.” 

Is car racing a good training to manage a leading luxury brand?  At least, we already know that Lorenzo will do his best. Will his best be enough for Prada?