Hermes sales plunge 42 per cent amid global coronavirus store closures
Even the Birkin bag maker isn’t immune to effects of pandemic-induced lockdowns.
The iconic Birkin bag may be the world’s most resilient luxury product in times of crisis, but even its maker is feeling the brunt of the COVID-19 pandemic. French luxury goods company Hermes has announced that sales fell 42 per cent in the second quarter as the coronavirus pandemic forced it to shutter stores across the globe and pause production.
“This unprecedented crisis, which began at the start of the year and is still ongoing, allows us to test our business model’s strength,” Axel Dumas, Executive Chairman of Hermes, said in a statement.
In Asia (excluding Japan), sales plummeted by 9 per cent but is gradually recovering, buoyed by the reopening of stores in mainland China. However, Hermes noted that activity in Hong Kong and Macau remains down due to border control measures.
“This unprecedented crisis, which began at the start of the year and is still ongoing, allows us to test our business model’s strength." – Axel Dumas
Although sales in Japan were down by 23 per cent, Hermes noted that “recovery is particularly dynamic thanks to the loyalty of local customers”. Sales was especially strong on the new hermes.com/jp/ja platform.
Sales in the US were the most hit, down by 42 per cent, while Europe has been greatly affected by the reduction in tourist flows. In Europe (excluding France), sales plummeted by 36 per cent while Hermes’s home country France posted a 38 per cent drop.
However, the silver lining of the pandemic lies in Hermes’s online channels, where sales have grown by double-digits across Asia. Online sales in the first half increased by more than 100 per cent in China, with growth continuing even after stores reopened in the country, reported Jing Daily.
In a sign of confidence, Hermes also announced that it has increased its workforce by almost 300 people, mostly in production. The company’s total workforce now stands at 15,698 people.
Despite growing economic, geopolitical and monetary uncertainties around the world, Hermes said it confirms “an ambitious goal for revenue growth” in the medium term.