“Such unprecedented crisis”, currently underway, has not spared Hermès: sales down 42% in 2020 second quarter, – 25% in the half-year period. Nevertheless, the French fashion brand has been showing a number of tangible signs of resilience and reaction. For example, as reported by Reuters, they announced they hired 300 employees in the first six months of the year. They primarily did it to reinforce manufacturing departments: in so doing, their leather articles manufacturing capacity will keep expanding. “Our loyal clientele and our appealing collections, alongside our smart omnichannel network and our working autonomously are the pillars that make us confident about the future. They will support and foster our recovery”, commented executive president Axel Dumas.
-25% in the half-year period
At the end of the first six months of the year, Hermès overall revenues amounted to 2.49 billion euros, therefore dropping by 25% at fixed rates of exchange. Operating margin of profit reached 21.5%, compared to 34.8% in the first six months of 2019. Net profits amounted to 335 million euros: they decreased by 55.5% compared to profits made last year, in the first half-year period. According to FactSet estimates, financial analysts were expecting overall revenues to reach 2.48 billion euros and net profits to reach 403 million euros.
Earnings coming from the single brand boutique network have dropped by 22% at fixed rates of exchange, but “they are progressively picking up”. In March, all stores reopened in China, therefore driving earnings considerably. On the other hand, sales in Hong Kong and Macao are still at a standstill because of control measures imposed by customs. As reported by Reuters, according to Dumas online sales have increased by 100%, or more, in China, and they kept going up even after the reopening of selling stores.
Leather goods, gloves, shoes
The revenues of Leather Goods and Saddlery division (bags, equestrian products, notebooks and agendas, small leather goods) have decreased by 23%. The Ready-to-Wear and Accessories division (apparel, gloves and shoes) went down by 29%.
Testing our business model strength
“Such unprecedented crisis – claimed Axel Dumas –, which is still underway, gives us a valuable opportunity to test our business model strength”. While speaking to journalists, Dumas stressed the fact that the situation is still “complicated”. “It will be difficult to handle the impact of the pandemic, caused by Covid-19 outbreak, throughout 2020 – emphasized the fashion brand in an official statement –. Yet, our craftsmanship model, mostly implemented in France, along with a balanced distribution network and our local clientele, are the factors that can reinforce and support the resilience of our company”.
Picture taken from hermes.com