(AOF) – As part of the implementation of its share buyback program, Hermès International entrusted a mandate to an investment service provider (ISP) in May 2020. This mandate was terminated on June 20, 2022, the date on which a new mandate was concluded with the PSI. Pursuant to this mandate, Hermès International instructed the PSI to buy back on its behalf, independently, in accordance with the regulations in force, a maximum number of Hermès International shares of 500,000 shares.
This transaction is part of the buyback program authorized by the sixth resolution adopted by the general meeting of April 20, 2022.
AOF – LEARN MORE
Key points
– Luxury family group created in 1837 of medium size but of worldwide renown, with 320 exclusive stores in the world;
– Sales of €6.4 billion, split between Europe for 25% including France for 10%, Japan for 13%, Asia-Pacific excluding Japan for 46%;
– One of the most diversified brands in the world of luxury goods, from leather goods (50% of sales), to clothing and accessories (22%), including silk and textiles (7%), perfumes (4%), watches (3%), tableware…;
– Business model based on vertical integration, the “power of the hand”, the maintenance in France of the know-how of the more than 6,000 craftsmen who manufacture 7/10ths of the products sold, territorial anchoring and sharing with 3 thirds of the value created (investments, shareholders, reserve);
– Company controlled by family shareholders (66.6% of capital and 78.2% of voting rights) of which Axel Dumas and Henri-Louis Bauer (representative of Emile Hermès) are general partners;
– Sound financial structure with €7.4 billion in shareholders’ equity, cash of €4.2 billion, combining maintenance of operational investments and generosity towards shareholders.
Challenges
– Growth strategy based on an exclusive distribution network, reinforced by the regular opening of new stores and on the professional quality of the employees;
– Innovation strategy inherent in the creative profession, with Petit H, Hermès Horizon / deployment of an e-commerce platform available in 29 countries, use of the digital flagship for omnichannel sales paths, etc.;
– Environmental strategy organized around 2 ambitions: by 2020, 50% reduction in carbon emissions from own activities, compared to 2018 and renewal of the commitment in the 3
th
Livelihoods Carbon Fund;
– Ability to resist fads and economic contexts thanks to its “classic” image and its timeless character;
– High negotiating power, strong ability to increase prices thanks to a very high-end positioning, strategy of securing supplies and active policy of buying back concessions, margin support factor.
Two fundamental trends linked to Covid
The health crisis has reinforced the development of digital in a sector that is not very oriented towards e-commerce. Its share has doubled in two years to reach 22% in 2021, or 62 billion euros. Accessories, sneakers and beauty products are top sellers. According to Bain, digital should become the leading luxury sales channel by 2025. Players like Kering therefore want to increasingly internalize the management of their sites. The other fundamental movement linked to the health crisis, and which is part of a logic of sustainable development, is the boom in the second-hand market. It has jumped 30% since 2019 and represents 12% of the total market. These changes are driven by the younger generations, while 25-40 year olds should represent 70% of buyers in 2025, compared to 45% in 2019.