Hermès turnover halved as Covid effect continues

Comparable sales went down more than 40 % at French luxury brand Hermès, which felt obligated to emphasise that the crisis is not over yet. 

Along with other luxury brands

A resurgence in Asia was not enough to compensate for the difficult situation in Europe and the United States, CEO Axel Dumas told Zone Bourse. Specifically, he mentioned the effect of Chinese tourists not coming to Europe – normally, they make up about a third of the brand’s European sales.

Turnover dropped below the billion-euro threshold and went down 42 % to 982 million, even worse than the 39 to 40 % the banks were expecting. However, the drop is in line with that of many of its luxury competitors, such as Kering (- 43.7 %) and LVMH (- 38 %). Comparing the second to the first quarter, however, paints an entirely different picture: in the first three months of 2020 turnover dropped only 7.7 %.

Chinese online sales doubled

The pandemic and its consequences have also tainted the company’s profit margins, although they remain among the highest in the sector: they dropped from 34.8 % to 21.5 %, with net profit dropping 56 % to 335 million euros.

Hermès was quick to point to the bright side of this financial release as well: especially Chinese online sales were excellent, more than doubling and keeping that trend going even after physical stores reopened. The company says it is confident its products like the Birkin Bag can attract a lot of new online customers.