Hermès AGM Mingles Shadow Puppets and Luxury Wisdom
● "We live in an unstable world, and therefore it is important to be a resilient company," CEO Axel Dumas told the gathering.
PARIS — An Hermès shareholders' meeting hits different.
Held at Art Deco concert hall Salle
Pleyel in Paris on Tuesday, it opened with a display by Philippe Beau, a French master of shadow puppets. Backed by a live pianist, drummer and bass player, he twisted his supple fingers into flying birds, hopping rabbits, and — of course — galloping horses.
The meeting had some of the usual — colorful pie charts, a snoozy auditor presentation and long-winded questions from cranky shareholders, including one from PETA — but more of the less expected, and the artistic. The latter included stirring films showing Kelly bags painstakingly hand-painted; wicker being harvested, sorted and ultimately woven into handbag frames; bricks being baked to build its new leather goods workshop in Louviers, France, and bespoke stained-glass windows being installed in the new Vienna store, creating a heavenly atmosphere.
Hermès chief executive officer Axel Dumas was also more expansive than usual, reflecting on profound changes in the luxury sector since he arrived at the management helm a decade ago.
“We live in an unstable world, and therefore it is important to be a resilient company that makes progress when it is possible, and sits tight when things are difficult,” he told the capacity crowd.
He went on to describe those changes, the first being that “people no longer buy luxury goods based on their income, but based on their wealth,” he said, stressing that a “crisis in real estate” will have a bigger impact on spending than slower economic growth, for example.
The executive also described a polarizing competitive landscape. Whereas at the beginning of his tenure, only a few percentage points separated the strongest and weakest players in luxury, today the best-in-class might be logging 20 percent annual gains and the worst-in-class slipping by 20 percent.
Bucking a global slowdown in luxury spending, Hermès reported sales gained 17 percent at constant exchange in the first quarter of 2024, whereas organic revenues at Gucci, which is undergoing a revamp, were down 18 percent in the same period.
“This is a testament to the loyalty of our clients and the strength of our business model,” he said, referring to the strong first-quarter results. “We are looking ahead this year with a lot of confidence and a unique, robust model.”
Finally, Dumas trumpeted the advantages of “being a certain size,” explaining that brands with scale can invest heavily in production, distribution and communications, and thereby win greater mind and wallet share. In 2023, revenues reached 13.43 billion euros.
It was trumpeted several times during the meeting that revenues at Hermès have roughly tripled in size over the past decade, with the share price increasing tenfold — going from the price of a silk square to a leather and canvas handbag, said Dumas, employing Hermès products as economic shorthand.
Regarding the outlook, the executive cited some moderating in its growth, which at constant exchange rates stood at 20.6 percent in 2023, 23.4 percent in 2022, and 41.8 percent in 2021. He attributed this to post-pandemic euphoria “petering out.”
Still, “I believe there's a very strong dynamic in Asia with a middle class that is growing. I'm quite optimistic when it comes to the future growth of our industry,” he said.
Hermès International set its ordinary dividend for 2023 at 15 euros, with an exceptional dividend of 10 euros being distributed, thanks to the company's banner performance and its strong cash position.
Also at the meeting, executive chairman Henri-Louis Bauer paid tribute to Bertrand Puech, who died Jan. 31 year at age 87.
A fifth-generation member of the founding family, Puech started his career in 1964 as a manager at the Hermès flagship on the Rue du Faubourg Saint-Honoré in Paris, rose through the ranks to become deputy director of human resources in 1990, and eventually president of the management board in 2007.
Bauer said Puech staunchly defended the independence of the group in the face of a creeping takeover attempt by rival LVMH Moët Hennessy Louis Vuitton, and paved the way for the nonlisted holding company, dubbed H51, which groups 50.15 percent of its share capital.