At the end of June, revenue for the semester was down by 24% at current exchange rates. In the second-quarter revenue was down by 41%, as Hermès took the hit of the COVID-19 pandemic.
“This unprecedented crisis, which began at the start of the year and is still ongoing, allows us to test our business model’s strength. True to its values, the group has preserved jobs and maintained the basic salaries of its employees worldwide without having recourse to the exceptional governmental subsidies provided in various countries. I am proud of the teams’ dedication, and the courage, commitment, and generosity they have shown. I want to thank them. The loyal clients, desirable collections, agile omnichannel network, and independence of the group are the pillars that give us confidence in the future and will support our recovery”, commented Axel Dumas, Executive Chairman of Hermès.
The first semester of 2020
The group’s consolidated revenue in the first half of 2020 amounted to 2 488 million euros, down by 24% at current exchange rates and -25% at constant exchange rates. Sales trends in the second quarter (-41% at current exchange rates and -42% at constant exchange rates) reflect the impacts of the health crisis on the network. Recurring operating income amounted to 535 million euros (21.5% of sales) at the end of June. Net income reached 335 million euros (13.5% of sales).
Sales by geographical area
In the first half of 2020, all the geographical areas were impacted by the health crisis and stores’ closure. The revenue generated in the group’s stores was down by 22% at constant exchange rates. In Asia excluding Japan (-9%), all stores reopened in Mainland China in March, and sales are growing strongly, while activity in Hong Kong and Macao remains down due to border control measures. Several countries in the region experienced a second wave of store closures, including Singapore until mid-June, Australia, and Thailand. A new flagship store opened in Sydney in June, and the stores in Guangzhou in Mainland China and Bellavita in Taiwan successfully reopened in April and May after expansion. The roll-out of the new digital platform in Asia continued in Hong Kong and Macau in February and in Korea in June, in a context of very strong growth in e-commerce sales. In Japan (-23%), following the Japanese government’s announcement of a state of emergency, most stores were closed in April and May for about 6 weeks. Sales were especially strong on the new hermes.jp platform. America (-42%) was affected by total store closings for more than 10 weeks in the United States, as the other countries in the region, with a very gradual recovery at the end of June. The Montreal store, enlarged and renovated, reopened in June. Europe excluding France (-36%) and France (-38%) have been strongly affected by the reduction in tourist flows. After the closure of the entire European network for an average of 9 weeks, stores gradually reopened in Germany late April, in France mid-May, in Italy and Spain late May and in the United Kingdom mid-June.
Sales by business line
At the end of June, Leather Goods and Saddlery posted a decrease (-23%) due to the closure of stores in the various geographic areas. Hermès closed its production sites in France mid-March to protect employees for four weeks and reopened gradually, except for Herme’s Perfumes site in Le Vaudreuil which began producing hydro-alcoholic gel. Investments in production capacity have been maintained, with the continuation of the Guyenne and Montereau leather workshops, and the projects in Louviers and in the Ardennes. Hermès continues to strengthen its local integration in France. The group’s other business lines were also strongly impacted by store closures in the second quarter, after an excellent month of January which had benefited from the favorable dynamics of the Chinese New Year. The Ready-to-wear and Accessories (-29%) and Silk and Textiles (-39%) business lines were further penalized by the traffic declines. Perfumes were down (-29%) as were Watches (-19%). The other Hermès business lines (-4%) have held up particularly well thanks to Jewellery and Home universe.
The Hermès group increased its workforce by almost 300 people, mainly in production. At the end of June 2020, the group employed 15 698 people, including 9 773 in France.