Hermès International Société en commandite par actions 

Sector: Luxury Countries of operation: Operates stores in 50 countries, including Australia, China, France, Germany, India, Japan, South Korea, the UK and the US Key product categories: Apparel, accessories, beauty, footwear, home, jewelry, leather goods and saddlery, perfumes, silk, textiles, watches and other luxury goods Annual Metrics [caption id="attachment_148797" align="aligncenter" width="698"] Last fiscal year end: December 31, 2021[/caption]   Summary Based in Paris, Hermès was founded in 1837 as a harness maker but has evolved to become one of the most recognizable luxury brands in the world. The company designs, manufactures and markets luxury products in several categories, including leather goods and saddlery, men’s and women’s ready-to-wear, accessories, home, perfumes and watches. Today, a sixth-generation family member sits at the helm of Hermès. Leather goods and saddlery, the company’s original sector, represented half of its consolidated sales in fiscal 2021. The company’s luxury leather goods combine top-quality materials with skilled leather workers applying traditional skills. The majority (58%) of its products are made in-house, preserving and enhancing the brand’s unique positioning. Digitally, Hermès launched a website in Canada and the US in 2017, and in Europe and China in 2018. The Hermès website, a flagship, features both goods for purchase and editorial content, which is then posted on social media platforms. Company Analysis Coresight Research insight: Hermès prides itself on its craftsmanship, vertical integration and the exclusivity accorded by its legacy. It is renowned globally for its iconic Birkin handbags and other leather goods, which are typically made in limited quantities or only sold to exclusive customers. However, recently, Hermès has also become known for its jewelry and home goods. On a two-year basis, Hermès rebounded strongly in 2021, up 30.5%. The company’s core leather goods and saddlery segment, which accounts for 46% of its business, saw revenues rise 22.8%. Meanwhile, its “Other Hermès sectors” segment, which comprises jewelry and home goods, saw substantial growth of 94.5% to €1.0 billion ($1.1 billion), indicating that the company could make its mark in new product segments in the coming years. At the same time, its ready-to-wear and accessories sector saw 44.3% revenue growth on a two-year basis. Its fairly new perfume and beauty segment resonate with opportunities for growth in the beauty market while also making the brand more accessible to aspirational consumers. In fiscal 2022, Hermès plans to launch new products in its beauty, homeware and jewelry segments—with these lines, it aims to draw more aspirational consumers who can eventually turn into mainstream luxury purchasers.

Tailwinds	Headwinds
New and aspirational shoppers looking to purchase luxury goods Growing segment of youthful consumers with rising incomes Demand for timeless, seasonless, and durable luxury goods Recovery in travel	Rise in conscious shopping and demand for non-animal materials in products Economic uncertainty across global markets Competition from other luxury brands Supply-side disruptions and input cost inflation

Strategy Hermès outlined the following objectives for fiscal year 2022 during its earnings call on February 18, 2022: 1. Dynamic job creation in all métiers and regions

• Develop jobs across its products categories; it is building regional centers of expertise and leather goods workshops in Louviers (Eure), Sormonne (Ardenne) and Riom (Auvergne), slated to open in 2022, 2023 and 2024, respectively.

2. Continued investments in production capacities:

• Oversee multi-year investment at its Pierre-Bénite Silk and Textiles production site. It is developing a new printing line as part of expanding capacity at the site, although it has not specified an exact timeline.

3. Reinforcement of CSR commitments:

• Continue achieving multi-year corporate social responsibility (CSR) goals. Most recently, it joined the Science Based Target Initiative (SBTi), a pathway to halt global warming to 1.5 degrees Celsius, committing to reduce certain emissions by 2030 and others by 2050.

4. Store openings and expansions:

• Consider the following locations for new store openings or expansions—Madison Flagship in New York (US), Saint Petersburg (Russia), Qiantan Taikoo Li in Shanghai (China), Strasbourg (France), Barcelona (Spain), Doha Vendome Mall (Qatar) and the Heartland 66 Office Tower in Wuhan (China).

5. Product category expansions:

• Launch “the fourth chapter of beauty dedicated to the complexion, Hermès Plein Air, in March.”
• Add a tableware line, Soleil d’Hermès, to its home category and a jewelry line, HB7, to its “haute bijouterie” collection in Paris.

Revenue Breakdown (FY21)   Company Developments

Date	Development
January 31, 2022	Hermès commits to the SBTi, aligning its sustainability targets to contribute to halting global warming to 1.5 degrees Celsius.
October 27, 2021	Hermès announces HermèsFit fitness events, set to take place over five days in December in select flagship stores. During the event, customers will participate in various fitness activities and try out Hermès accessories that will substitute for fitness accessories, such as bracelets instead of barbells.
September 10, 2021	Hermès opens a new leather workshop near Bordeaux, France, its nineteenth to date, creating 260 jobs at the site. One-third of the workers come from Hermès’ other sites and will help train, mentor and support new hires.

Management Team

• Axel Dumas—Executive Chairman
• Florian Craen—EVP Sales and Distribution
• Éric Du Halgouët—EVP Finance

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Source: Company reports/S&P Capital IQ