Hermès, the luxury fashion brand, has reported a revenue increase of 15.6% between October and December 2020, signaling its continued economic recovery. Despite a 6% decrease in revenue for the entire year, Hermès has managed to navigate the challenges posed by the Covid-19 crisis and the halt of tourism effectively. The Parisian brand recorded a revenue decline of 6% in 2020, reaching 6.38 billion euros on a constant currency basis. However, this result reflects the brand’s resilience, especially considering the third quarter’s recovery of 7% and the fourth quarter’s impressive 15.6% increase.
Axel Dumas, the Managing Director of Hermès, attributed the strength of their results to the appeal of their collections and the agility of their artisanal model. Dumas expressed pride in the work carried out by all Hermès employees, acknowledging their courage, solidarity, and commitment. He also expressed gratitude to their loyal customers worldwide.
Asia has been identified as the main growth engine for Hermès. While boutique revenue experienced a slight decrease at the end of last year (-2%), the fourth quarter saw a remarkable recovery of 21% through this distribution channel. Hermès adapted to the surge in digital usage during periods of social distancing by launching its Beauty offer on Chinese e-commerce giant Alibaba. Moreover, the successful deployment of its new brand platform in Asia has confirmed the success of online sales in the region and globally. However, precise information about the exact share of online sales in Hermès’ overall results was not provided.
In 2020, Asia (excluding Japan) solidified its position as the leading growth market with a 14% increase in sales, including a significant boom of 47% in the fourth quarter. This growth was attributed to the brick-and-mortar store network’s renovation and expansion and a shift toward local purchases. On the other hand, America experienced an annual decline of 21%, which was almost identical to Europe’s decline of 20%, while France recorded a decline of 29%.
Additionally, Hermès has increased its workforce by 1,183 people, including the integration of its supplier J3L. The brand’s 16,600 employees, who will receive a bonus of 1,250 euros this year for their dedication and contribution to the company’s results, can expect the addition of new employees in the upcoming months. This expansion is linked to the planned openings of the Guyenne leather goods store in Gironde and the Montereau store in Seine-et-Marne. Furthermore, Hermès has announced the inauguration of a workshop in Louviers in 2022, followed by a site in the Ardennes in 2023 and another in Auvergne. These initiatives aim to boost production and meet the increasing demand for leather goods, which saw a growth of 18% in the last quarter of 2020.
Looking to the future, Hermès, along with LVMH and Kering, acknowledges the challenging and unpredictable epidemic context of 2021. The brand states that it will continue its journey with confidence, retaining its identity and confronting the uncertainties of the world.
Useful links:
1. BBC: Hermès records fourth-quarter sales surge in Asia
2. Vogue Business: As Hermès grows, its supplier adds four new sites in France
