Hermès International (France)

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Hermès (pronounced "air-mez" and never "her-mees") is one of the world's most prestigious luxury brands, and one of the very few that has successfully retained its independence despite widespread consolidation in the sector. So far at least, although in 2010 the group received an unwelcome approach from larger rival LVMH, which has accumulated a 22% shareholding in Hermes through the open market, much to the founding family's dismay. Hermes is perhaps best-known for that quintessential French fashion accessory, the silk scarf. However it also produces a wide range of other accessories, including what are arguably the world's most desirable handbags, as well as ready-to-wear clothing for both men and women. Parent group Hermès International also has a small collection of other interests, including British shoemaker John Lobb.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 16th Feb 2017: There have been winners and losers so far in the luxury market in the wake of LVMH's record performance reported last month. Hermes too reported strong growth for the year. Preliminary figures showed revenues topping E5bn for the first time, up 7% to E5.2bn. Prada, however, was less lucky. Its revenues for the year dipped 10% to E3.12bn, down 10% year-on-year, including a 14% slump from its own direct retail channels. Both companies report full figures next month.

Adbrands Weekly Update 26th Mar 2015: French luxury group Hermes showed little sign of the malaise affecting some other luxury groups, with full year revenues for 2014 rising by 10% to a record E4.12bn, and net profits up 9% to E859m. Despite widely reported slowdowns in luxury spending in China, both Japan and the group's wider Asia Pacific markets delivered 13% growth, not far behind the Americas at 15%. Europe managed a respectable 7% growth.

Adbrands Weekly Update 4th Sept 2014: LVMH appears to have accepted an effective defeat in the dispute over its acquisition of a large shareholding in family-controlled rival Hermes. LVMH secretly accumulated around 22% of Hermes' equity in a series of transactions in 2010 and 2011. This was widely seen as the prelude to a takeover attempt, though LVMH insisted it was merely acting as a passive investor. Hermes sued LVMH in an attempt to win back the shares, alleging insider trading. Now, in a court-mediated truce, LVMH and parent entity Christian Dior have agreed to spin off the entire stake equally to shareholders. Bernard Arnault's private investment vehicle, the biggest ultimate shareholder, will end up with a reduced stake of around 8.5% of Hermes. 

Adbrands Weekly Update 20th Feb 2014: Smaller luxury groups side-stepped at least some of the slowdown being experienced by other companies in the sector. Whereas LVMH managed only 4% growth last year, the more compact Hermes and Prada each achieved twice that figure, while organic growth excluding the effects of currency fluctuation remained in double digits. Hermes reported preliminary revenues of E3.75bn, up 8% on a reported basis or 13% organic. That was well below the previous year's 25%, but the group remains one of the few still finding room for development in Europe (up 12%), while America and Asia excluding Japan saw rises of 14% and 16% respectively. China in particular remains strong, with sales in that market alone up 19%. "The industry talks of a slowdown in China," said CEO Axel Dumas, "but we didn't feel it... There is no change to the trend." Prada went one better, with reported revenues rising by 9% to E3.59bn, equivalent to 13% at constant exchange rates. Sales at the group's own stores were up 18% organic, while sales in China and America both rose by 15% at constant rates. Europe fared less well at 6% organic. Both companies will report earnings next month.


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Background

Free for all users | see full profile for current activities: Thierry Hermès first established the firm in 1837 in Paris's Champs-Elysées to make fine riding saddles and harnesses for European nobility. In the early years of the 20th century, the company diversified into other travel accessories, such as luggage, and during the 1920s it was the first company to introduce France to what was then a revolutionary new fastening device, the zipper, originally on a pair of gloves. Under the founder's grandson Emile Hermès, the company began producing other travel accessories and wristwatches, as well as apparel for men and women. Its famed silk headscarves were first introduced in 1936. These too were travel themed, designed to protect the hair of elegant ladies when travelling in new-fangled open-topped automobiles. In keeping with the group's equestrian heritage, all the designs of its scarves maintained the theme of horses and carriages until the 1970s, when other designs began to be introduced for the first time (although the group logo and many of its scarf designs still hark back to its founder's principal trade).

During the 1950s, management of the company passed to Emile's sons-in-law, Robert Dumas and Jean-René Guerrand. Hermès launched its first fragrance for men in 1951, the first for women, Calèche, ten years later. Jean-Louis Dumas, the grandson of Emile Hermès, joined the family firm in the 1960s, and took control in 1978 after the death of his own father. He began to expand its presence internationally, always maintaining its prestige and strictly avoiding the temptation to water it down through licensing. In 1993, the group floated around 20% of its shares. The remainder still belong to the founding family. Despite many approaches from would-be acquirers, they have firmly rebuffed any talk of a sale.


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