Guinness chaser sours the Arnault cocktail: A sharp fall in share prices has come as France's LVMH grapples with falling sales of luxury goods, writes Nicholas Faith

Problems are piling up for Bernard Arnault, the mercurial chairman of LVMH, France's largest luxury goods group.

On Tuesday, LVMH suspended its shares to announce that it was taking its slice of the pounds 125m restructuring charges at Guinness, with which it has a 24 per cent cross-holding. When the shares were relisted yesterday they fell by Fr193 to Fr3,228.

The damage went further. Shares in other companies associated with Mr Arnault, such as the Bon Marche department store group and the Dior fashion house - which both fell by about 4 per cent - also lost ground.

LVMH, along with other glamour stocks of the 1980s, is suffering in the frugal 1990s. It relies on the world's largest collection of luxury brand names.

In cognac, Hennessy and Hine face problems with declining brandy consumption in most of their markets.

In champagne, LVMH's brands - which include Moet, Veuve Cliquot and Mercier - account for 40 per cent of exports of a drink that has suffered badly from the recession.

Champagne's decline has been particularly severe in Britain, where sales fell 40 per cent in 1991 and have barely recovered any lost ground since then.

Other famous LVMH names include Christian Dior perfumes, which operate in a fiercely competitive market, and Louis Vuitton luggage, which has been affected by the collapse in consumer confidence in Japan. Against such a background, LVMH is being resilient and expects profits this year to be down by only 20 per cent to around Fr3bn ( pounds 353m).

In the rest of Mr Arnault's empire, the most obvious worries concern Bon Marche and the Conforama chain of furniture shops. Both are acutely vulnerable to a slowdown in sales that has caused havoc in the French retail sector, where margins were already wafer-thin.

There are similar problems in the haut couture sector, where he controls two very different firms, Dior (LVMH owns only the rights to the perfume business) and Christian Lacroix, which he launched with his own money a few years ago.

Concern also surrounds the finances of the whole structure. At the top sits Arnault & Associes, in which his family has a 60 per cent stake. But this has a market capitalisation of under pounds 300m, controlling an empire worth at least 10 times that size.

As most of the key companies in the long and convoluted chain that leads from the Arnault family to LVMH are private, nobody can accurately estimate the debts in the Arnault empire.

The complex structure reflects Mr Arnault's rapid ascent to the top. Still only 41, he started his meteoric rise eight years ago with the reconstruction of the Boussac textile empire. Within five years he had gained control of LVMH. But this left him operating through a series of holding companies, each of which had stakes, not only in other holding companies, but also in other operating companies.

It is a combination of the pyramid shape of the empire and the business problems of his various companies that is causing such unease among public investors.