Hermès H1 turnover hit by store closures due to pandemic
30 Jul 2020
The Hermès group’s consolidated revenue in the first half of 2020 amounted to 2,488 million euros (2,926.5 million dollars), down 24 percent at current exchange and 25 percent at constant exchange rates. The company said in a statement that sales in the second quarter were down 41 percent at current exchange and 42 percent at constant exchange rates, reflect the impacts of the health crisis on the network. Net income reached 335 million euros (394 million dollars), 13.5 percent of sales.
Commenting on the trading results, Executive Chairman of Hermès, Axel Dumas, said: “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.”
All Hermès core markets hit by Covid-19 related store closures
In the first half, the company added, all the geographical areas were impacted by the health crisis and stores’ closure. The revenue generated in the group’s stores was down 22 percent at constant exchange rates. Sales in Asia excluding Japan were down 9 percent. In Japan, sales were down 23 percent, following the Japanese government’s announcement of a state of emergency, most stores were closed in April and May for about six weeks.
Revenues in America declined 42 percent, 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. Europe excluding France reported decline of 36 percent and France was down 38 percent, affected by the reduction in tourist flows.
Product category-wise leather goods and saddlery posted a decrease of 23 percent due to the closure of stores in the various geographic areas. Hermès closed its production sites in France mid-March and reopened gradually, except for the Hermès Perfumes site in Le Vaudreuil, which began producing hydroalcoholic gel. 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 favourable dynamics of the Chinese New Year. The ready-to-wear and accessories posted a decline of 29 percent and silk and textiles sales were down 39 percent, while perfumes were down 29 percent, as were watches, down 19 percent. The other Hermès business lines reported a decline of 4 percent.