Hermès strikes confident note at virtual general meeting

By

Dominique Muret

Published
May 5, 2021

Hermès held a somewhat atypical general meeting on Tuesday, opting for a closed-door, virtual format. Livestreamed via its website from its offices in Pantin, the luxury group's AGM ran without a hitch – or an audience – in the sanitized atmosphere of a TV studio decorated with the house's colours, as speeches from managers were alternated with films including video clips and mini-documentaries. 

Everybody highlighted the resilience of the company over the last year of crisis, demonstrated by "very impressive results in 2020," which saw the group close the year with revenues of 6.4 billion euros, a 7% decline in constant currencies, when compared to 2019. 
 
Three key elements were singled out for particular attention. Employee engagement was described as "decisive" by Hermès, which paid its associates a special bonus in 2021 by way of thanks. Secondly, the group said that its vision is focused on craftsmanship, creativity and innovation, all of which responds to its "quality requirement." Finally, Hermès emphasised the continuity of its strategy, which is "driven by its shareholding family".

On this basis, the group has decided to transform its general partner, Émile Hermès SARL, which is owned by the family's heirs, into a société par actions simplifiées (SAS) or simplified joint-stock company. As explained by the chairman of the executive committee, Henri-louis Bauer, the sole objective of this change in status is to "bring in younger family members, of whom there are many, as next year there will be more than 100 of us." This resolution was approved with 99.96% of votes. The company is currently run by the sixth generation of the Hermès family, which still holds more than half of its capital. 

Having pointed out the acceleration in the implementation of digital and sustainability initiatives at the house, Hermès CEO Axel Dumas emphasised the importance of the human element. The company created 1,183 jobs in 2020 and 4,350 over the course of the last five years, figures which bring its total workforce up to 16,600 people, two-thirds of whom (10,383) work in France. According to the company, artisans account for half of its total workforce.

Likewise, the group made investments of around 448 million euros last year, focusing particularly on its sales network, which boasts 306 stores around the world as of 31 December 2020. It also invested in its supply chain, having acquired J3L, its supplier of metal items such as clasps, buckles and locks for its leather goods, last July. The company had already acquired a 30% stake in the manufacturer in 2013. 
 
As for EVP of finance Eric du Halgouët, he celebrated the group's "solid results in 2020 in terms of results and cash," noting that the company has an internal financing capacity of around 2 billion euros, free cash flow of almost 1 billion and net cash of 4.9 billion. In this context, the meeting also approved the proposed dividend of 4.55 euros, the same value as 2019's. 

Hermès' managers managed to dodge question time by inviting shareholders to consult their answers directly on the group's financial website. After which, there was nothing left to do but wrap up the meeting and reveal the date of next year's: 3 May 2022.