|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||795.00 - 808.00|
|52 Week Range||516.00 - 830.00|
|Beta (5Y Monthly)||0.49|
|PE Ratio (TTM)||75.58|
|Earnings Date||Sep. 09, 2020 - Sep. 14, 2020|
|Forward Dividend & Yield||4.55 (0.56%)|
|Ex-Dividend Date||Apr. 28, 2020|
|1y Target Est||498.46|
(Bloomberg) -- French authorities are looking into whether a Hermes International heir lied about selling some of his shares during a rival’s attempt to build a stake in the maker of $10,000 Birkin handbags.The probe into Nicolas Puech’s claim he still owned nearly 6% of Hermes half a decade ago was sparked by tension in the family after LVMH’s 2010 surprise stakebuilding. The case, which focused on the role of Puech’s wealth manager, Eric Freymond, was secret until its disclosure this month by France’s top court.After messy legal battles against the Hermes founding family, LVMH boss Bernard Arnault started to unwind the 23% stake in 2014. The family then turned on itself, and Hermes International lodged the criminal complaint. Hermes told French investigators Puech, a great-great-grandson of the founder of the 183-year-old company, made a false statement to the luxury firm about his shareholding.The whole affair “highlights a complete failure of family governance,” David Hawkins, co-founder of family business consulting firm Percheron Advisory, said.The French investigation, which is nearing completion, is looking into the suspicions of authorities that Freymond played a role in the 77-year-old Puech’s share disclosures for 2013 and 2014. According to the top court ruling detailing parts of the case, investigators suspect that the wealth manager acted “in an intentionally deceitful manner” and provided false data that led to the sworn statements.The probe came to light in a ruling by France’s top court that threw out some evidence against Freymond. His attorney said the decision may upset the probe.‘Surprised’François Besse, a lawyer for Puech, said his client was “surprised” by the Hermes complaint and hasn’t been charged. The share statement, “which Mr. Puech had no legal obligation to sign, was not signed lightly but after verification with his bankers of the exact number of Hermes shares he held,” Besse said.François Zimeray, an attorney for Freymond, described the case as “poorly extinguished embers of an old fire” and said his client “fully contests” the allegations. Paris prosecutors said that the probe is ongoing.Hermes declined to comment beyond noting that it no longer breaks out Puech’s holding since it published its 2016 annual report. LVMH declined to comment, saying it isn’t a party to the investigation.According to the top court ruling, French investigators’ checks found that Puech hadn’t owned nearly 6% of Hermes shares since 2012, and they say his claim made the firm provide inexact information about its share allocation and floating capital. Hermes also alleges Puech failed to stick to a legal obligation to publicly state that his shareholding had gone below 5%.$6 Billion Holding?Besse dismissed the allegations, saying his client’s 5.8% stake was unchanged.“Mr. Puech still owns, among other securities, these 6,082,615 Hermes shares, which he has always managed alone,” the lawyer said. He added that Puech didn’t sell shares to LVMH.Since the end of 2015, Puech stopped disclosing his exact Hermes holding, which would now be worth about $6 billion if he still has the 5.8% stake. The family is among the world’s richest with a fortune of more than $60 billion, according to the Bloomberg Billionaires Index.The luxury firm has pretty much always been a family affair. Axel Dumas, a member of the sixth generation, has been at the helm for half a dozen years. Puech and his brother Bertrand, who led the counter-attack to fend off LVMH, are the grandsons of Emile Hermes, who transitioned the saddlemaker into luxury bags. Nicolas’s cousin, Jean-Louis Dumas, led Hermes from 1978 until his retirement in 2006.Although the court case has been secret, the rift caused within the Hermes family by LVMH’s disclosure of its stakebuilding on Oct. 23, 2010, is well-known.Puech has been seen as a rebel ever since he became the only relative not to put any shares into a new holding company set up in 2011 to prevent LVMH from wresting control. He said at the time that he thought the move would deprive them of the power to individually influence the firm’s management.Court RulingThe family tensions have also been visible in Hermes’s filings. Puech joined Hermes’s supervisory board in 2012 and attended each meeting that year. In 2013, though, he attended less than a third of them, the fewest among members, and didn’t attend any the following year after resigning from his position in August.He stepped down “because he has felt for several years beleaguered by members of his family, who have attacked him on several fronts,” Fashion Network reported at the time, citing a spokesperson for Puech.The French top court got involved when Freymond challenged the evidence used by investigators.The wealth manager won an argument about documents provided by a Swiss stock-market regulator in a related case that was closed four years ago without charges. The Cour de Cassation said the evidence shouldn’t have been used as the purposes of the two probes were different. The current one focuses on forgery allegations, while the other targeted possible market abuses.While it’s unclear how central to the case the disputed evidence is and what impact Freymond’s court victory will have on the investigation, Zimeray says the ruling “will further weaken an already fragile complaint.” Additionally, a new investigative judge, who may have different views on the case, is now in charge after the previous one left her position several months ago.(Adds details on family tensions starting in 17th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- One takeaway from the third-quarter earnings we’ve seen so far is that consumers are still spending — and they’re reaching for big, well-known brands for everything from food to face cream. This has played out most dramatically in high-end retail, where in some cases wealthy shoppers are buying more expensive goods than they were a year ago.There are a few reasons why this may be. As I have noted, some of the spending is coming from savings accumulated during lockdown, and affluent consumers want to get the most bang for their buck. If they’re reaching outside their regular price range or making their first luxury purchase, that often means shelling out for a household name: Louis Vuitton, Christian Dior or Hermes — all of which have seen strong sales recoveries.It also helps that the biggest companies — LVMH Moet Hennessy Louis Vuitton SE, Hermes International, Cie Financiere Richemont SA and Gucci-owner Kering SA — have the resources to make their brands stand out in a crowded market. They can afford to double down on social media campaigns. Meanwhile, consumers want tried and tested styles, whether that’s a Hermes Birkin bag or a Moncler puffer jacket. With fewer occasions to dress up, as well as an increasing awareness of fashion’s environmental costs, shoppers may decide to buy less, but buy better.All of this favors luxury houses steeped in heritage, such as Hermes, the first high-end group to return to sales growth in the third quarter. The handbag maker was also helped by the fact that it’s less dependent on tourist spending, which accounts for about 20% of sales globally, than its competitors, which see 30% to 35% of sales come from tourists, according to Thomas Chauvet, luxury analyst at Citi.But the shift in demand from cutting-edge to classic may be more of a challenge for Gucci, where sales excluding currency movements fell 8.9% in the third quarter. Its flamboyant aesthetic has won a strong following among younger customers. But it’s now toning down its ostentatious styles to adapt to more conservative tastes.Shoppers reaching for the familiar also creates particular challenges for smaller companies. Given the power of the luxury conglomerates and muscular single-brand groups such as Moncler SpA, there may now be more pressure to sell out to them.Salvatore Ferragamo SpA, for example, hasn’t reported its third-quarter sales yet, but the Italian house’s turnaround efforts have been disrupted by the pandemic. Investors will be watching to see whether Ferragamo and other companies seeking to revive their fortunes, such as Burberry Group Plc, are similarly lifted by the rising luxury tide. Ferragamo denied this week that it held talks with investors over a potential stake sale. But the family-controlled group would be wise not to turn its back on any options. The strides that the mega-brands have made this year will make it harder for smaller houses to gain traction with the wealthiest shoppers, even as a strong recovery in demand for luxury is expected in 2021. Of course, there is a possibility that consumer tastes pivot back toward experimentation when the world returns to some semblance of normality. But that future seems far away and far from certain. Even if shoppers do want less familiar, more edgy designs, companies will need to reach them online and through social media channels. Having the best retail locations and hottest designers will also remain crucial. That means continued investment for all groups, big and small.If life continues to get tougher for more niche brands, the next hot trend in luxury could be a shakeup of industry ownership.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
HERMÈSQuarterly information report as at the end of September 2020Hermès returned to growth in the third quarter (+7% at constant exchange rates) At the end of September, revenue reached €4.3bn (-14% at constant exchange rates)Paris, 22 October 2020After a second quarter marked by the health and economic crisis, sales in the third quarter (+7% at constant exchange rates and +4% at current exchange rates) are driven by strong activity in the group's stores (+12% at constant exchange rates), the momentum in Asia and a significant improvement in all other geographical areas.At the end of September 2020, the Group’s consolidated revenue amounted to €4,288 million, down 14% at current exchange rates and at constant exchange rates. Axel Dumas, Executive Chairman of Hermès, said: "In 2020, we are seeing the affirmation of major strategic commitments with social and environmental responsibility, the digitalisation of uses and lifestyles, as well as positive market dynamics in Asia. Taking into account these profound and lasting changes allows us today to remain confident despite a still uncertain future. Our good performance enables us to continue to invest and to create jobs. I would like to thank all the teams at Hermès who work daily to keep the house growing.”Sales by geographical area at the end of September (at comparable exchange rates, unless otherwise indicated)At the end of September 2020, sales in the group’s stores were down 11% at constant exchange rates, with a third quarter up 12%. The acceleration of online sales is strengthening, with no rupture in trends, with a sharp increase in traffic and conversion rates. Wholesale activities are down 35% over nine months, mainly penalised by travel retail. * Asia excluding Japan (+4%) pursued its very favourable dynamic, driven by an excellent third quarter up 29%. It benefitted from the remarkable performance of Mainland China, Korea, Australia and Thailand. The activity in Hong Kong and Singapore improved. Online sales are growing strongly and benefit from the new digital platform, deployed this year in Hong Kong, Macao and Korea. In China, the Dalian store was expanded and renovated in September. * Japan (-11%), after the unfavourable impact of store closings in the spring, saw a strong upturn in the third quarter up by 11%. It confirmed its momentum thanks to the loyalty of local customers, despite a high comparison basis due to anticipated purchasing expectations linked to the VAT hike last year. The Sendai store was renovated in September, after the Marunouchi store in Tokyo in August. A fourth store opened in the Shinsaibashi district in Osaka. * America (-29%) is slightly down in the third quarter due to the store closures in Hawaii since August. The Denver store in Colorado reopened in August at a new location. * Europe excluding France (-27%) and France (-33%) are still suffering from the drop in tourist flows, partly offset by local customers. A new store was opened in September in Vremena Goda, Hermès’ third Moscow address, twenty years after the first store opened on Stoleshnikov Lane.Sales by business line at the end of September (at comparable exchange rates, unless otherwise indicated)The Leather Goods and Saddlery business line (-13%), improved strongly in the third quarter, which renewed with a +8% growth as a result of the resumption of deliveries and sustained demand. The increase in production capacities continues, with the opening of the sites in Guyenne (Gironde) and Montereau (Seine-et Marne) in 2021, consolidation of our capacities in Normandy with the Louviers site (Eure) in 2022, and the project in Ardennes in 2023. A second production site in Auvergne has been announced and will become the 22nd Leather Goods and Saddler workshop. They are all located in France where Hermès continues to consolidate its local presence.The Group’s other business lines also benefitted from the good resumption of business in the different geographical areas. Ready-to-Wear and Accessories (-16%) showed a strong turnaround in the third quarter at +7%. The Women’s Spring-Summer 2021 fashion show, presented at the Paris Tennis Club in October, met great success, after that of the men’s collection early in July. Silk and Textiles (-32%) was penalised by a high comparison basis in the third quarter and by the lower sales in travel retail.Perfumes, also penalized by the impact of travel retail activity, were down 22%. After the very successful launch of the first collection of lipsticks in early February, the Beauty line continued to perform well. Watches (-8%) achieved a very good third quarter, up 13%. The Other Hermès business lines (+ 12%) are highly growing with a 42% increase in the 3rd quarter, thanks to Jewellery and Home universe. The new Lignes sensibles high jewellery collection was unveiled at the end of September.Highlights At the end of September, currency fluctuations represented an unfavourable impact of €22 million on revenue. Over the first nine months, Hermès International redeemed 168,780 shares for €123 million, excluding transactions completed within the framework of the liquidity contract. OutlookFor 2020, the impacts of the Covid-19 epidemic remain difficult to assess, as the scale, duration and geographic extent of the crisis evolve every day. Our highly integrated craftsmanship model and balanced distribution network, as well as the appeal of our collections and our customers’ loyalty give us confidence in the future and support our resumption of operations. The Group remains highly involved and active by regularly assessing the situation and adapting measures to those taken by health and public authorities. Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, control over know-how and singular communication.With pride in its craftsmanship model, in 2020 Hermès pays tribute to the extraordinary tool that is the hand, as well as to the ingenuity that drives every one of the house’s craftsmen and women. For it is this combination that characterises the innovative spirit of Hermès, its commitment to the Saddler’s spirit.In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the Group confirms an ambitious goal for revenue growth at constant exchange rates. The press release on revenue at the end of September 2020 is available on the Group’s website: https://finance.hermes.com.Upcoming events: * 19 February 2021: publication of the 2020 annual results * 22 April 2021: publication of Q1 2021 revenue * 4 May 2021 : Shareholders’ 2021 General Meeting REVENUE BY GEOGRAPHICAL AREA 1 As of Sept. 30th Evolutions In millions of Euros 20202019PublishedAt constant exchange rates France 420.0623.3(32.6)%(32.6)% Europe (excl. France) 629.3858.5(26.7)%(26.5)% Total Europe 1,049.31,481.8(29.2)%(29.1)% Japan 566.5626.7(9.6)%(10.9)% Asia-Pacific (excl. Japan) 1,994.61,946.82.5%3.6% Total Asia 2,561.12,573.5(0.5)%0.1% Americas 606.5866.7(30.0)%(29.3)% Other 71.490.1(20.8)%(20.9)% TOTAL 4,288.35,012.1(14.4)%(14.0)% 3rd quarterEvolutions In millions of Euros 20202019PublishedAt constant exchange rates France 167.8217.5(22.8)%(22.8)% Europe (excl. France) 280.4313.9(10.7)%(9.9)% Total Europe 448.1531.3(15.7)%(15.2)% Japan 244.3226.08.1%11.1% Asia-Pacific (excl. Japan) 810.8647.525.2%29.2% Total Asia 1,055.2873.520.8%24.6% Americas 269.8297.5(9.3)%(5.2)% Other 188.8.131.52%6.5% TOTAL 1,800.31,727.94.2%6.9% 1 Sales by destination. REVENUE BY sector As of Sept. 30th Evolutions In millions of Euros 20202019PublishedAt constant exchange rates Leather Goods and Saddlery 1 2,159.92,492.3(13.3)%(12.9)% Ready-to-Wear and Accessories 2 974.41,174.8(17.1)%(16.4)% Silk and Textiles 271.0403.5(32.8)%(32.4)% Other Hermès sectors 3 424.2380.611.4%12.0% Perfumes 191.2246.0(22.3)%(22.2)% Watches 127.6139.0(8.2)%(7.7)% Other products 4 140.0175.8(20.4)%(20.3)% TOTAL 4,288.35,012.1(14.4)%(14.0)% 3rd quarterEvolutions In millions of Euros 20202019PublishedAt constant exchange rates Leather Goods and Saddlery 1 879.8839.94.8%7.8% Ready-to-Wear and Accessories 2 437.4420.34.1%6.8% Silk and Textiles 105.8137.0(22.8)%(20.5)% Other Hermès sectors 3 184.9133.139.0%42.4% Perfumes 78.387.3(10.4)%(9.9)% Watches 53.448.510.0%12.7% Other products 4 60.761.9(2.0)%(1.0)% TOTAL 1,800.31,727.94.2%6.9% 1 The “Leather Goods and Saddlery” business line includes bags, riding, diaries and small leather goods. 2 The “Ready-to-wear and Accessories” business line includes Hermès Ready-to-wear for men and women, belts, costume jewellery, gloves, hats and shoes. 3 The “Other Hermès business lines” include Jewellery and Hermès home products (Art of Living and Hermès Tableware). 4 The “Other products” include the production activities carried out on behalf of non-group brands (textile printing, tanning…), as well as the John Lobb, Saint-Louis, Puiforcat and Shang Xia products. REMINDER OF PREVIOUS PUBLICATIONSINFORMATION BY GEOGRAPHICAL ZONE * 2020 2019 In millions of Euros Q1 ReportQ2 ReportH1 report Q1 ReportQ2 ReportH1 report France 168.983.4252.2 184.8221.0405.8 Europe (excl. France) 234.7114.3348.9 261.6283.0544.6 Total Europe 403.5197.7601.2 446.4504.0950.4 Japan 213.6108.6322.2 204.2196.5400.6 Asia-Pacific (excl. Japan) 600.9582.91,183.7 655.9643.41,299.3 Total Asia 814.5691.51,505.9 860.1839.91,700.0 Americas 258.578.3336.8 269.7299.6569.2 Other 29.015.144.1 33.531.164.6 TOTAL 1,505.5982.52,488.0 1,609.71,674.53,284.2 * Sales by destination.INFORMATION BY SECTOR 2020 2019 In millions of Euros Q1 ReportQ2 ReportH1 report Q1 ReportQ2 ReportH1 report Leather Goods and Saddlery 1 771.1509.01,280.1 808.2844.21,652.4 Ready-to-Wear and Accessories 2 325.8211.3537.0 360.2394.4754.6 Silk and Textiles 115.050.2165.2 140.4126.2266.6 Other Hermès sectors 3 122.9116.4239.2 116.7130.9247.6 Perfumes 82.130.8112.9 84.674.1158.7 Watches 41.033.274.2 43.447.190.5 Other products 4 47.731.679.3 56.257.7113.9 TOTAL 1,505.5982.52,488.0 1,609.71,674.53,284.2 1 The “Leather Goods and Saddlery” business line includes bags, riding, diaries and small leather goods. 2 The “Ready-to-wear and Accessories” business line includes Hermès Ready-to-wear for men and women, belts, costume jewellery, gloves, hats and shoes. 3 The “Other Hermès business lines” include Jewellery and Hermès home products (Art of Living and Hermès Tableware). 4 The “Other products” include the production activities carried out on behalf of non-group brands (textile printing, tanning…), as well as the John Lobb, Saint-Louis, Puiforcat and Shang Xia products. REMINDER - FIRST HALF 2020 KEY FIGURES(In millions of euros)H1 2020FY 2019H1 2019 Revenue 2,488 6,883 3,284 Growth at current exchange rates vs. n-1-24.2%15.4%15.1% Growth at constant exchange rates vs. n-1 (1)-24.9%12.4%12.0% Recurring operating income (2)535 2,339 1,144 As a % of revenue 21.5%34.0%34.8% Operating income 535 2,339 1,144 As a % of revenue 21.5%34.0%34.8% Net profit – Group share 335 1,528 754 As a % of revenue13.5%22.2%23.0% Operating cash flows634 2,063 971 Investments (excluding financial investments)162 478 170 Adjusted free cash flow (3)27 1,406 618 Equity – Group share 6,340 6,568 5,763 IFRS net cash position (4)3,742 4,372 3,532 Restated net cash position (5)3,922 4,562 3,740 Workforce (number of employees)15,698 15,417 14,751 (1) Growth at constant exchange rates is calculated by applying the average exchange rates of the previous period to the current period’s revenue, for each currency.(2) Recurring operating income is one of the main performance indicators monitored by the group’s General Management. It corresponds to the operating income excluding non-recurring items having a significant impact likely to affect the understanding of the group’s economic performance.(3) Adjusted free cash flow corresponds to the sum of operating cash flows and change in working capital requirement, less operating investments and repayment of lease liabilities, as per IFRS cash flow statement.(4) The IFRS net cash position includes cash and cash equivalents, less bank overdrafts and short-term debts. It doesn’t include liabilities related to the application of IFRS 16. (5) The restated net cash position includes short-term investments that do not meet IFRS cash equivalents criteria mainly because their original maturity exceeds three months.Limited review procedures have been carried out on the condensed interim consolidated financial statements by the Statutory Auditors in accordance with applicable regulations. The half-year financial report, the press release and the presentation of the 2020 half-year results are available on the group’s website: https://finance.hermes.com.Attachment * CP CA Q32020 - VA VDEF