Hermès Touts Craftsmanship Over Metaverse at Shareholders’ Meeting – WWD

127 shares, 87 points

PARIS — Digital commerce has become second nature for Hermès International, which boasts that 78 percent of customers at its online store are new to the brand.

But how about the metaverse? Not so much.

“I don’t know,” Hermès executive chairman Axel Dumas shrugged when confronted with a question about its metaverse intentions at the company’s annual shareholders’ meeting here Wednesday. “For the time being, we’re interested to see how this world evolves and changes.”

Dumas noted that it “could conceivably” offer Hermès a “great means of communications” in the future — and in its quirky fashion.

“But this is not a priority of ours,” he stressed. “We’re mainly interested to learn and to monitor, rather than rush into the metaverse.”

Hosting its first in-person meeting since 2019, Hermès made no mistake that it is a company rooted in physical objects, human creativity and exceptional craftsmanship, screening countless videos of its artisans caressing, cutting and stitching its coveted leather goods in light, airy workshops set in the picturesque French countryside. “We still devote 15 hours to making each handbag,” Dumas declared proudly.

The two-hour session opened with a pianist engaged in a duet with exotic birds singing and strutting on a giant screen, electronic gurgles and a flute player adding to the cacophony.

Hermès has every right to chirp, having logged a “record year” in 2021 that saw revenues vault 41.8 percent to 8.982 billion euros — this despite price increases amounting to less than 2 percent, Dumas pointed out.

The executive gave no specific guidance for 2022, while declaring: “We are full of confidence about the future.”

The French luxury house certainly galloped ahead in the first quarter of 2022, recording a 27.1 percent rise in revenues at constant exchange to 2.76 billion euros and touting double-digit growth across all business lines and territories.

Looking ahead, Hermès plans to continue to increase its production capacity, especially in leather goods, and expand its retail network. Major openings planned for this year include New York City, Shanghai, Strasbourg, Barcelona and Doha.

“Our stores are all unique places,” Dumas asserted, explaining that its boutique buyers are fully empowered to tailor product assortments to local tastes and needs.

The French firm ended 2021 with 303 boutiques in the world, having added or expanded locations in cities including Detroit, Tokyo, Macau and Shenzhen.

The gathering served as a recap of how mightily Hermès weathered the pandemic, with executives touting the exceptional flexibility and devotion of its artisans, HR managers and sales associates; its culture of “French excellence,” and the unity of the family shareholders. About 100 or so family members last year decided to block 54 percent of the share capital until at least 2041 under the nonlisted holding company known as H51.

Responding to shareholder questions about its large cash reserves, Dumas said not having any financial constraints or debt is “of paramount importance” to its resilience, allowing it to maintain jobs and wages, while continuing to invest in retail operations and factories.

Hermès operates 52 production sites in France, 19 of them for leather goods. Last month, the company said it would open two more leather goods workshops in France within the next five years, adding 500 more artisans to its payroll. Three other sites are already under construction in France, meaning it will boast 24 workshops for leather goods and saddlery by 2026.

Meanwhile, other Hermès sectors logged faster growth than handbags in 2021. By product sector for the full-year versus 2019, watches rose 76.6 percent and ready-to-wear and accessories 44.3 percent, outpacing leather goods and saddlery at 22.8 percent.

Hermès added about 1,000 jobs in 2021, bringing the worldwide employee count to 17,600, all of whom received a 3,000 euro bonus and 100 euro a month salary bump.

“We are pleased to share with employees, the benefits of our growth,” Dumas said.


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