Hermes weathers virus storm better than rivals

A Hermes shop at the Royal Exchange in London. The Hermes women’s fall-winter 2020-2021 ready-to-wear collection on show in Paris in February, below. (AFP)
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Updated 24 April 2020

Hermes weathers virus storm better than rivals

  • Sales in China grow by double digits after shops reopen there in March

MILAN: Hermes has weathered the global coronavirus crisis better than rivals, with a 7.7 percent decline in first-quarter comparable sales, and the Birkin handbag maker said that business was picking up strongly in China after shops reopened last month.

The fall in sales compares with declines of 15 percent or more reported by other luxury goods groups including LVMH, Kering and Moncler.

The coronavirus crisis first hit China — a major market for luxury goods — late last year before spreading around the world, leading to lockdowns across Europe, including Italy and France, as well as the US.

Hermes Chief Executive Axel Dumas told reporters that the second quarter would be hit hard by the health emergency given that 75 percent of the group’s stores are still shut.

However, he said that since shops in China had gradually reopened in March, sales there had grown by double-digits from a year earlier.

“The trend is very high since we reopened, probably higher given that no travel is allowed,” he said.

Dumas said that the relatively resilient performance in the first quarter was partly due to an “incredible January” thanks to the Chinese New Year.

“The Chinese New Year counts almost as a double month,” he said.

He added that until the group was forced to shut its production sites — almost all of them in France — in mid-March, it did not have any supply- chain issues, unlike some rivals.

Hermes closed all but one of its 42 sites in France, with a perfume factory converted to make hand sanitizing gel instead. The group has been partially resuming operations in production and logistics sites since April 14.

Hermes, traditionally regarded as particularly resistant to downturns, has long been one of the steadiest performers in the luxury goods industry, in part due to its careful management of production and stocks, which have helped to promote its aura of exclusivity.

Its coveted $10,000-plus Birkin handbags tend to generate waiting lists, and can sometimes increase in resale value, adding to their
attraction as a luxury purchase that is more immune to fashion trends and economic crises than other products.

Hermes said that consolidated revenues for the quarter came in at €1.51 billion ($1.6 billion). As a result of the crisis, the group had already said that it would trim its dividend for 2020 to €4.55 per share from €5, keeping the payout at the same level as in 2019.

The group is maintaining strategic investments, both in production capacities and the distribution network, to prepare to resume business in the best possible conditions, it said.

Dubai launches economic program for post COVID-19 recovery 

Updated 05 August 2020

Dubai launches economic program for post COVID-19 recovery 

  • “The Great Economic Reset Programme” is part of a “COVID Exit initiative” to help the recovery and reshaping of the economy
  • The economic program will feature analyses of current and future policies

DUBAI: Dubai launched an economic program as part of its efforts to reshape the emirate’s economy for a “sustainable” and “resilient” future post the coronavirus pandemic, the government said. 
The Dubai government partnered with the Mohammed bin Rashid School of Government (MBRSG) to launch “The Great Economic Reset Programme” as part of a “COVID Exit initiative” to help the recovery and reshaping of the economy, state news agency WAM reported on Tuesday. 
The economic program will feature analyses of current and future policies, research and extensive stakeholder consultation to set the direction and tone of future economic policies, regulations and initiatives.
The government plans to use local and international experts for economies and societies to create growth strategies for the Dubai economy.
The MBRSG held a “Virtual Policy Council,” with global experts and thought leaders to discuss the impacts of COVID-19 on the economy and potential policy responses and initiatives. 
Chief economists, senior practitioners and researchers from leading global institutions including the World Bank, joined experts from Dubai Economy and the MBRSG at the first roundtable.
“I believe the triple helix collaboration between public, private and academia stakeholders have always produced the best solutions in the past. In the highly uncertain environment now, extensive collaboration and cooperation between all stakeholders are vital to our future prosperity. The Virtual Policy Council will propose the best approaches Dubai and the UAE can adopt to address the risks and opportunities in the next normal economy,” said Mohammed Shael Al-Saadi, CEO of the Corporate Strategic Affairs sector in Dubai Economy.
“This Virtual Policy Council is a key component of the whole process where global experts and thinkers share their views on the future economy. In this new era, the role of governments in enabling the new economic actors is becoming increasingly central, and Dubai is well-positioned to lead the way with innovative models of growth post COVID19,” said Professor Raed Awamleh, Dean of MBRSG.
The roundtable also discussed the impact of the pandemic on international trade, foreign investment and tourism, as well as the rise of digital globalization.