PARIS – The Hermès International shareholders’ meeting met the moment, with the company holding its position as France’s largest luxury company in terms of market capitalization.
“It may last a day or two, but at the moment we are the largest French capitalization in the financial markets,” said chief executive officer Axel Dumas.
Held at the Salle Pleyel, which hosts splashy awards shows such as the César awards, Hermès celebrated its pole position with an opening xylophone performer, followed by an eclectic series of films sprinkled throughout the presentation.
Related Articles
The themes varied from tales about the company’s craftsmanship and how bags are repaired and restored to an ode to this year’s theme of the “art of drawing,” and a madcap, Wes Anderson-style slick take on their fanciful immersive traveling treasure hunt that popped up in locations including Hong Kong and Dubai.
You May Also Like
The panel of executives presiding over the events included supervisory board chair Éric de Seynes, chief financial officer Eric du Halgouët and Dumas.
Hermès’ performance in 2024 was “solid in a rather unpredictable economic and geopolitical context,” du Halgouët said.
Dumas assured the audience that Hermès’ solid performance is not in danger, despite the economic uncertainties that have hit the luxury sector hard, and the looming U.S. tariffs.
“I’m not too worried about our industry. I’m not too worried about tariffs. I would rather there be no tariffs, of course, but we can deal with these as we have done in years past,” he said. The executive confirmed that tariffs, as well as any increase in production costs, will be passed on to the customer, who is resilient enough to absorb it.
The company touted its latest round of full-year results, with annual revenue at 15.2 billion euros, up 15 percent at constant exchange in 2024.
The cash flow was 3.8 billion euros, up 18 percent year-over-year, while net profit was 4.6 billion euros, up from 4.3 billion euros the year prior. The results handily beat other companies such as LVMH Moët Hennesy Louis Vuitton, which saw its net profit down 17 percent, and Kering, which saw its net profit slide 62 percent.
Du Halgouët said that the 2024 numbers looked like a slowdown compared to 2023, but that “was an outlier year” due to all-time sales highs post-pandemic. The most recent year was “more a return to normal.”
Dumas also shrugged off dupes — this year’s Wirkin phenomenon comes to mind — as products a discerning client can recognize.
“I’m not too worried. Our clients can feel the difference. We fight against dupes and have a great team to fight counterfeit products…[but] sometimes you are copied.”
During the question-and-answer session, shareholders poked fun at the rivalry between the families that own Hermès and the Arnaults, who control LVMH, and who once made a run for Hermès.
Dumas assured the audience that the Arnault family has not overstepped any shareholder declaration threshold since 2017.
Another asked if Hermès might start producing in the U.S., as Louis Vuitton has done with its factories in Texas.
The executive dismissed the suggestion, stating that Hermès already has a four-year plan to open new production facilities in France and will not deviate, plus the storytelling of “Made in France” is key to the brand’s success.
“It is indeed essential for us to produce where there is a story of culture and know-how that creates beautiful objects,” he said. Hermès produces some products outside of France, such as lacquer and silk, but that is only because those countries are the best in class for their categories.
Other audience members carefully phrased their questions with a balance of flattery and inquiry, asking what makes Hermès stronger than other fashion companies.
Dumas reflected that the company’s focus on craftsmanship over branding has given it strength. He credited the last financial crisis in 2008 as raising the brand’s value. “There was a flight to quality,” he said. “Hermès is the gold standard in a way.”
He also highlighted that the company’s marketing budget is small in comparison with its cash flow and conducts more personalized events rather than big campaigns, which makes it “stand out compared to other competitors.”
Rivalries aside, shareholders expressed concerns about the environment — both physical and economic — and Dumas sought to assuage their worries.
One shareholder remarked on the current heat in Paris, and inquired why board members were “traditional” and not being filled by those with eco-credentials. Dumas defended the board nominees: BNP Paribas CEO Jean-Laurent Bonnifé, diplomat Bernard Emié and Bel Group CEO Cécile Béliot-Zind, who has a background in agri-food.
“These three candidates are people who have great humanity and a very good understanding of the value of things,” he said. “We’re not expecting the supervisory board members to challenge the know-how that we already have in-house; instead, we’re asking for preparedness in understanding the issues in depth [and] reflection.”
Responding to a question about animal welfare and leather alternatives, Dumas said that the company is “open” to next-gen materials such as mushroom leather and lab-grown leather, but that the products do not yet meet Hermès’ standards. The challenge is getting these materials to scale, and the company is investing heavily in research and development, he added.
Regarding the 6 million shares once owned by heir Nicolas Puech that are now missing, Dumas said: “You’ve probably read in the media that he can’t find his shares, and it’s not a surprise to us. There are a number of procedures ongoing that I hope will provide some clarity.”
Dumas was also asked how shareholders can better access Hermès special events, and if the brand would consider a membership club. De Seynes demurred, asking those interested to join the French Equestrian Federation if they are interested in access to horse races such as Saut Hermès. As far as arranging visits to the company’s sites, “workshops have to work,” he joked.
Shareholders also questioned why the company is sitting on its cash reserves, instead of disbursing it in dividends. Du Halgouët said that the large cash reserves help it better navigate lean times, such as during the pandemic.
“We are affected, like others, by what happens. We do operate in the real world. It just so happens that we are usually affected after the others. If there is a crisis, sometimes its just a matter of time,” said Dumas.
Another of the company’s aims “is to not deal with concessions.” Still, it uses the model to enter new markets such as Indonesia, but the hope is to start with a concession and then purchase the business, as it did in UAE.
The duty-free model will remain the same, Dumas said, as travel retail is not the company’s expertise. But he doesn’t see mass expansion in the future to continue to grow revenues, and has in fact closed stores since he joined the management team.
“We have fewer stores and more turnover. Due to the [prior] lack of stores in the right location, and it’s true that often it becomes a very, very large investment, so these are large investments that we carry out thanks to our cash flow,” he added.