Hermès Touts Confidence, Savoir-faire at Shareholders’ Meeting
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A drum kit and electric guitars at Hermès International? The French luxury firm opened its annual shareholders’ meeting Thursday morning in Paris with a live performance by five-piece outfit Ishkero.
The company certainly rocked in 2022 and the first quarter of 2023, with revenues vaulting 23 percent across all regions and product categories, outpacing its luxury rivals.
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“We are likely to be less festive,” chief executive officer Axel Dumas deadpanned once the jazz band had been cleared away and he took his seat behind a long white desk with three other Hermès executives in dark suits.
The men reviewed the company’s stellar financials, noting that each of its 19,700 employees received a 4,000-euro bonus for last year, and that the 2022 dividend would be 13 euros, up from 8 euros in 2021.
Dumas reiterated his confidence for the year ahead, emboldened by the firm’s “unique” business model and despite geopolitical turbulence and other uncertainties.
During the question-and-answer period, he claimed not to be aware that a key luxury rival cited softness in the U.S. in the first quarter, while Hermès roared ahead selling leather goods strongly.
“We see good momentum in China and we see good momentum in the U.S.,” he said, suggesting its strong focus on desirable objects engenders resilience. “We are not the canary in the coal mine.”
He described a “long-term strategy in China” and gradual expansion into new cities “in a stable and respectful manner. I think this stability helps us in forging ahead. We are not managing the group by quarter.”
Last year, openings on the mainland included Zhenzhou and Shanghai Qiantan.
Hermès ended 2022 with 300 stores, crediting its new flagship at Madison Avenue and 63rd Street in New York City for boosting its fortunes in the Americas. Dumas dubbed it a “beautiful success since the day of its opening.”
Key openings and expansions this year include Chengdu and Beijing Peninsula in China; Chicago and Naples, Florida, in the U.S., and Bordeaux in France.
The bulk of the meeting was devoted to showcasing the brand’s know-how and creativity via artful and sometimes touching films of artisans conferring over fine leathers, or disabled people being hoisted onto saddled horses to awaken new sensations and movements.
One clip featured four animated Kelly handbags performing a cappella version of Rossini’s overture from “The Barber of Seville,” their leather straps flailing like limbs.
Among the most successful leather goods creations last year were the R.M.S. suitcase, the Kelly en Désordre and the Haut à Courroies Rock handbag.
Enchanted by the “mouthwatering films,” one shareholder asked if Hermès might open any of its 54 production sites in France to visitors.
Dumas countered that “we can’t disrupt them,” calling the workshops “a production tool, not a communication tool.”
Some 76 percent of Hermès objects are manufactured in France. The company also has 14 production sites in Italy, Portugal, the U.K., Switzerland, the U.S. and Australia.
Dumas noted that artisans repaired 202,000 items last year, underscoring that Hermès creations are meant for lifetime enjoyment.
Executives also brushed off a suggestion that Hermès split its stock in order to make it more affordable.
Shares now hover around 2,000 euros, a 40-fold increase since the IPO and eightfold over the past decade, they noted.
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