Hermès Q1 sales hit by store closures across geographies

The Hermès Group’s consolidated revenue amounted to 1,506 million euros (1,625.6 million dollars) in the first quarter 2020, down by 6.5 percent at current exchanges rates and 7.7 percent at constant exchange rates. In the first quarter 2020, the company said, all the geographical areas were impacted by the health crisis and store closures. The revenue generated in the group’s stores was down by 7 percent at constant exchange rates. The company expects sales in the second quarter will be significantly impacted by the closures of a significant part of the network.

Commenting on the results, Axel Dumas, Executive Chairman of Hermès, said in a statement: “Since the beginning of the Covid-19 crisis, protecting the health of our employees and partners has been our priority, and has prompted us to close many stores and, temporarily, certain sites.”

Sales by geographical area at Hermès

In Asia excluding Japan, the company added, sales were down 9 percent. Mainland China gradually closed 11 stores as of the end of January, while all stores closed in Macao and opening hours were restricted in Hong Kong. Stores have been progressively re-opened in March in Mainland China, and those in Hong Kong and Macao regained traffic even though reduced due to border control measures. Several countries in the area have experienced a second wave of store closures, notably in Singapore, Australia and Thailand since early April. Hermès is continuing to roll out the new website in Hong Kong and Macao. In Mainland China, all of the stores were able to reopen, while Guangzhou store reopened after expansion in early April.

Revenues in Japan were slightly up by 1 percent. The company added that most stores have been gradually closed since the end of March, following the Japanese government’s announcement of a state of emergency for an unspecified period.

In America, sales dropped 6 percent, with all the stores closed and all e-commerce activities stopped in the United States since March 20, similar to other countries of the region. Revenues in Europe excluding France were down 11 percent and France saw sales drop of 9 percent with the store network closed mid-March.

All Hermès business lines witness decline in sales due to store closures

The company further said that leather goods and saddlery business line recorded a 6 percent decline as a result of the closure of stores in the various geographical areas.

The group’s other business lines have also been strongly affected by the closures of our stores in all the geographical areas, after benefiting from strong momentum in January thanks to the Chinese New Year, the ready-to-wear and accessories line saw sales decline of 11 percent and silk and textiles posted 20 percent drop.

Despite the successful launch of the beauty line beginning of February, perfumes were down 3 percent and watches, 7 percent. The other Hermès business lines posted 4 percent growth due to performance of jewellery.

Hermès said its supervisory board has decided to alter the proposed ordinary dividend distribution to be submitted to the general meeting of shareholders on 24 April 2020, reducing it from 5 euros to 4.55 euros per share, i.e. an amount identical to the sum paid in 2019.

Picture:Facebook/Hermès