Earnings call transcript: Hermes International sees strong Q4 2024 revenue growth

Hermes International (OTC:HESAF) reported robust financial results for Q4 2024, with revenue reaching €4 billion, marking an 18% increase at constant and current exchange rates. The company's annual revenue climbed to €15.2 billion, a 15% rise at constant exchange rates. Despite challenges in various markets, Hermes maintained a strong operational profitability of 40.5% and net profit of €4.6 billion, up 7% from the previous year. Meanwhile, Ramelius Resources, unrelated to Hermes, showed a slight increase of 1.92% to close at $2.61. According to InvestingPro data, Ramelius maintains an EXCELLENT financial health score of 3.81, with particularly strong metrics in profitability and growth.

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Key Takeaways

• Hermes International's Q4 revenue surged by 18%.
• The company expanded its retail network and workforce significantly.
• Hermes maintained a strong gross margin rate of 73%.
• The company is exploring new product lines, including Haute Couture and skincare.
• Hermes plans to continue price increases to offset production costs.

Company Performance

Hermes International demonstrated strong performance across all major regions, with notable growth in Japan and Europe. The company's strategy of vertical integration and focus on craftsmanship and quality continued to pay off, leading to significant revenue increases. Hermes' expansion efforts, including new workshops and retail stores, have bolstered its global presence, particularly in the US, China, and Japan.

Financial Highlights

• Annual Revenue: €15.2 billion (+15% YoY)
• Q4 Revenue: €4 billion (+18% YoY)
• Net Profit: €4.6 billion (+7% YoY)
• Current Operating Income: €6.2 billion (+9% YoY)
• Gross Margin Rate: 73% (up from 72.3% in 2023)

Outlook & Guidance

Looking forward, Hermes is cautiously optimistic about growth in 2025. The company plans to invest in production capacity and maintain a price increase strategy of 6-7% to cover rising production costs. Hermes is also exploring potential new product lines, including Haute Couture and skincare, which could further enhance its product portfolio.

Executive Commentary

Axel Dumas, Executive Chairman, emphasized the balance Hermes strikes between its strengths and weaknesses, stating, "The success of Hermes is down to the things that we do really well and then the things that we do really badly, but it's all balanced out." He also highlighted the unique position of Hermes' artistic director within the executive committee, underscoring the company's commitment to artistic innovation.

Risks and Challenges

• Supply Chain Disruptions: Potential risks from global supply chain issues could impact production timelines.
• Market Saturation: As Hermes expands, maintaining growth in mature markets could become challenging.
• Economic Pressures: Macroeconomic factors, such as inflation, could affect consumer spending.
• Cultural Integration: Rapid growth poses challenges in maintaining company culture and artisanal quality.

Q&A

During the earnings call, analysts raised concerns about Hermes' pricing strategy and its ability to maintain company culture amid rapid expansion. The company addressed challenges in the Chinese market and reiterated its commitment to artisanal production and employee training.

Full transcript - Ramelius Resources Ltd (RMS) Q4 2024:

Moderator/Unidentified Speaker, Hermes: Ladies and gentlemen, welcome to the Hermes twenty twenty four full year results presentation. I'm now going to give the floor to mister Axel Dumas, executive chairman of Hermes International, and Eric Dualgoete, executive VP finance. Over to you.

Axel Dumas, Executive Chairman, Hermes International: Good morning, everybody. Thank you for joining us for the publication of the 2024 annual results. We are delighted to welcome you once again to our Sevres store. I'm happy to present to you the results of the group in a more unpredictable economic and geopolitical context. The results of this year show the strength of the AMS (VIE:AMS2) model as well as the agility and the commitment of its teams that I warmly thank.

This model is based on a vertical integration with a strong local presence. It testifies to the strong desirability of our creations in all the mid years, all the divisions supported by artistic directors, a very demanding quality, preservation and transmission of our know how. Long standing and new customers were present everywhere in the world. In 2024, the house stayed its course maintaining its equilibria attached more than ever to the respect of its values. We pursued strategic investments in our production capacity to secure our supply chain and prepare the future as well as in our network everywhere in the world to accompany the dynamism of the sale in the long term of the house.

In all, over three years, Hermes strengthened its operational investments by 2,500,000,000.0, of which more than 60% in France. We continue to strengthen our teams. The house went beyond the threshold of 25,000 people at the December, of which 62% are in France. Faithful to its, responsible employer commitment and the will to share the fruit of its growth with those who contribute every day to it, MS would be distributing at the beginning of the year a bonus of €4,500 to all its employees worldwide in 2024. Twenty '20 '4 is also the victory of our partner horse riders in Versailles at the heart of summer.

So much emotion with five Olympic medals for the MS saddle. Let us now come to the salient highlights. Carried forward by the theme of 2024, the football spirit, the creative teams of the 16 divisions headed by Pierre Alexei Dumas give free rein free rein to the inventiveness. Let's give you a few examples. In the leather collections, alongside the iconic models, new models such as the Au Aqohua, Aqohua, Au Aqohua, Au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au Aqohua, au and the successful launch of the new feminine fragrance Beringia created by Christine Nagel.

The eighth collection of haute bijou three called the deformed de la couleur imagined by Pierre Hardy was revealed June in Paris and presented in Beijing and in Taipei. It met with great success. Great success also for the home, division with the Milan Fair as well as Tejas Equest, dinner set. And let us emphasize the launch of the Apple (NASDAQ:AAPL) Watch tenth series. We've thus celebrated ten years of our beautiful adventure with Apple and success of TechnoCraft.

In order to strengthen our vertical integration, we pursue investments in our production capacity. In 2024, we inaugurated our twenty third leather workshop in Rheum in the Piederdome in the former tobacco manufacturing factory. In 2025, we'll be inaugurating a new leather workshop in Lille Des Panac in Charon, and work being pursued in two other sites, Loup in Gironde and Charles Louis Mezier in the Ardennes, which will open 2026 and 2027. The capacity related investments continue in all other divisions with namely projects in Normandy for perfume and beauty and Limerge for tableware. Hermes also pursued its invest in logistics centers, the digital and information systems to accompany the development of the group.

Finally, securing supplies is something that we continue with historical and long standing partners of Hermes. Hermes thus continues to strengthen and expand the sectors of excellence in all the divisions founded on long term relations. Let us now come to the exclusive retail network integrated network. True to our desire for balance of geographical areas and multi local approach, we've extended our network to have our collections come close to local customers. New addresses have been inaugurated in The US, in Princeton, in New Jersey, or Asia with the opening of Wuxi in China and two openings in Tokyo, in Japan.

Amongst the extensions and renovations of stores, I would like to mention Lille and Nantes in France, Atlanta in The USA, Oregon, Shenzhen, Shenzhen in Beijing, SKP in China. The creation of Hermes expresses itself also through its seventeenth division of Hermes, that of communication. In the second half of 2024, we've continued to talk about the universe of Hermes in an offbeat and joyful manner for the public Mystery at the Grooms that took place first in Shanghai with the the event Hermes and the Making in Mexico Sewell in Zurich, when nearly 60,000 visitors had an exchange with artisans and 10 odd divisions and discovered how objects are made. And finally, Petitage went to Hong Kong and New York to reveal his joyful, unexpected, and unique creations with the approach of reuse of materials that were asleep.

Moderator/Unidentified Speaker, Hermes: Now let's talk about our commitment to sustainable development. First of all, in keeping with our social model, we paid out €350,000,000 in 2024. That includes the exceptional bonus and incentives and profit sharing in France. Hermes continued to reinforce inclusivity and diversity programs. We now have 48% of women in the top 100 of our highest executive positions.

To guarantee an inclusive work environment, Hermes recruits and retains people with disability a total of seven point one two percent in France. We continue to roll out our environmental strategy. Our decarbonization plan was deployed to all the divisions and led to a 64% reduction in scope one and scope two emissions compared to 2018 and a 50% drop in intensity for scope free over the same period of time. Nature is a source of exceptional material and lies at the heart of our model. We continue with our science based targets for nature initiative to set scientific objectives to preserve biodiversity.

We remain committed to supporting our local footprint by drawing on local know how and local employment, especially in France. We sped up job creation in 2024 with the recruitment of 2,300 new people, 1,300 in France. And in other words, that is 7,000 new jobs across three years, which I'm particularly proud of. To keep up with the growth of our business and to train employees to master our know how, we continue to roll out our in house training programs through the Ecole des savoir faire Hermes and its professional training programs across 10 regions. We have also made progress in the non financial area.

For example, the double a rating by MSCI, our presence on the a list of CDP, which puts us among the best environmentally performing companies around the world, the grand prize, Enfleur France, for the first time that we've received from the impact rating agency, and the grand prize for Employer for People with Disability. And then the Transparency Award, which rewards our financial information in the regulation regulated information. Now for our activity in 2024, our performance was solid. Our revenue in 2024 reached €15,200,000,000 up 15% at constant exchange rate and up 13% at current exchange rates. For q four, the revenue stands at €4,000,000,000, up 18% at constant and current exchange rates with good performance in America and robust growth in the other regions.

Axel Dumas, Executive Chairman, Hermes International: In 2024, all regions have shown solid performance. France plus 13% and Europe plus 19% recorded strong progressions sustained by robust demand. Japan plus 23% benefited from sustained and regular growth carried by the, fidelity of its local customers. Asia, excluding Japan, plus 7%, had a remarkable progression, thanks to sales, up in all of the countries of the Son America plus 15% confirms an excellent performance. Deadline others, integrated sales, retail sales of stores of Dubai and Abu Dhabi henceforth in global integration.

The changes in geographical breakdown reflected the progressive integration of The Middle East. Let us now look at the activity per division. In 2024, all the midi divisions except for watches flagged progress, which was solid. Leather bags, plus 18% has remarkable growth. Clothes and accessories, plus 15% pursued its solid dynamism, thanks to success of its collections.

Silk and textile division, plus 4% benefited from the diversity of its creations in the women and men's collections. Perfume and beauty plus 9% are in progression with namely the six of the new women's fragrance, Beringia. Watches minus 4%, which was penalized by more difficult context and a high comparison basis, pursued its development around watchmaking exceptional know how. Finally, the other divisions, MS, of MS plus 17%, which includes the jewelry and the home, are growing strongly. The evolution of the this distribution reflects the dynamism of leather.

May I now give the floor to Eric de Algued, Executive VP, Finance, who will present the results to you.

Moderator/Unidentified Speaker, Hermes: Good morning, one and all. 2023 was an exceptional year. The group delivered a solid performance in 2024, both in terms of results and cash flow generation. Current operating income stood at €6,200,000,000 up 9%. Available adjusted cash flow reached €3,800,000,000 up 18%.

The revenue was in excess of €15,000,000,000 in spite of negative currency impact and the depreciation of the Japanese yen and the Chinese yuan compared to euro. Our gross margin rate stands at 7.3% versus 72.3% in 2023, which I remind you had a positive currency hedging effect and a very good sell through rate. Communication expenditure reached €637,000,000 and made up 4.2% of sales after a speeding up of events in the second half of the year. Admin and commercial expenses, which include the costs of our distribution network and the support functions as well as the variable rents, reached €2,900,000,000 As was planned, the group beefed up its headcount in distribution and the divisions to keep up with the increase in footfall in the stores and with higher production. The other expenses and income, reached €941,000,000 They are made up of depreciation of tangible and intangible assets and depreciation of our usage rights.

They also include the expenses attributable to our employee free share plan for all employees. The current operating income, therefore, reaches €6,200,000,000 versus €5,700,000,000 in 2024 free, sorry, so up 9%. After a record level of 42.1% of sales in 2023, operational profitability stands at 40.5%, so the same as in 2022. The financial result is the product of €283,000,000 versus a hundred €19,000,000 in 2023. That includes the currency hedging costs and income on cash and with higher interest rates that reached €400,000,000 in 2024, and that explains most of the improvement of our financial results.

Tax expenses amount to €1,800,000,000 therefore, an effective tax rate of 28.7%, close to what we had forecasted

Axel Dumas, Executive Chairman, Hermes International: in

Moderator/Unidentified Speaker, Hermes: our half year results. Net income from associates reached €44,000,000 against €155,000,000 in 2023, and that's down to the consolidations of our activity in UAE, which were previously included through our equity method of accounting. We have a four point so a result of €4,600,000,000 7 percent up for the net profit group share. Net probability is in excess of 30% in 2024, slightly lower to 2023, but higher than in 2022. On this graph, you can see that there is an uptick in our revenue and net results across the last four years.

Over the last ten years, our annual growth rate of our revenue and net income reached respectively 1418%. Operational and operating investment reached billion in 2024. The group sped up its investment in distribution and in the production and division. Euros $611,000,000 were devoted to secure our stores and their strategic locations and to develop our distribution network in China with Beijing, Shenzhen, and Shenzhen in The US as well with the projects, for example, of Phoenix and Nashville. Two Hundred And Forty Four Million Euros were invested in real estate, digital, and information systems to keep up with the development of the, Metiers and to secure our supply chain.

€212,000,000 were dedicated to reinforcing our production capacity. For example, in our new lever goods production units in the Rion Loupe L'Espagneq as well as in the upstreams for hardware and perfumes. Our operating cash flow stands at €5,400,000,000 and increases at the same pace as our net result. Cash flow for activity reaches €5,100,000,000. It grew by 19% because of a lower need of working capital requirements.

After taking into account our operational investments and the repayments of lease liabilities, Available cash flow stands at €3,800,000,000. There's also our non controlling interest in UAE that is factored in and non controlling interests to be more vertically integrated. €2,700,000,000 of dividends were paid out and, Hermes International bought back €40,000,000 of shares. Our net cash, therefore, is €900,000,000 higher than it was and reached €12,000,000,000 in 2024. As on 12/31/2023, cash makes up 50% of our total assets and equity.

Equity more than €17,000,000,000 making up more than 75% of our liabilities. Therefore, we have consolidated our financial structure, which allows us to remain independent and to roll out our strategy with confidence. The ordinary dividend, which will be approved by the General Assembly on April, is €16 per share. So that's a 36% payout close to previous years. It will be paid out on May, and a €3.50 down payment will be paid on February 19.

And there will also be an exceptional dividend of Thank you very much for your attention and over to Axel, who is going to be talking about the outlook.

Axel Dumas, Executive Chairman, Hermes International: Thank you, Eric. I now come to the prospects of the group that remain unchanged. In an economic and geopolitical context that is more complex, the group embarks on 2025 with confidence, thanks to its highly integrated artisanal model, its well balanced retail model, and the creativity of its collections and its loyal customers. In the beginning of 2025, Hermes keeps the course attached more than ever to its fundamental values of quality, creativity, and know how. The theme of the year, drawing to craft from, saddle stage to the line design.

Drawing is the start of everything in MS. We pursue the dynamic of job creation, multi local and multi division, as well as investments in production capacity. We will continue to accompany our suppliers and all our partners. We will also invest in, omnichannel distribution network with openings and enlargements of stores, namely today in Florence. I would like to once again thank all the employees who have once again led to this very beautiful success as our customers all over the world.

We're now available with Eric to answer to your questions.

Moderator/Unidentified Speaker, Hermes: Good morning. I hope you can hear me. Antoine Page from BNP Paribas (OTC:BNPQY). Two questions for me. First of all, you said that all countries in Asia grew in 2024 in and yet in q three, there was a little bit of a slowdown in Asia.

What is your outlook for Asia? There was a little bit of a slowdown. Was that down to the real estate crisis or is it more concerning? And then ready to wear makes up 30% of your revenue. We talk a lot about leather goods at Hermes, which makes sense, of course.

But ready to wear seems particularly resilient. Your clients who buy ready to wear, are they the same people who buy handbags? Is there competition in ready to wear with other players out there? Thank you very much. Okay.

So, you've asked a supple question about China without actually naming them, so well done. But, yes, indeed, you are right. All countries, including Greater China, have grown in 2024. Now there are two things that I'd like to say. First of all, on the beginning of the year, it's very difficult for me to answer your question.

You know my theory. I don't know if it's a theory, but with the change in the date of the Chinese New Year and this year, it's been moved quite a lot. Last year it was very early January. This year it's quite late in February. So it's very difficult to give you any figures.

And New Year celebrations are very important in China. Last year, we had a very strong New Year and very good performance, and yet things had slowed down previously in China. Now Hermes overall is quite resilient, and sometimes we are affected but later than others. So it might hide the fact that we're affected by the crisis but, you know, we are like everybody else. We follow the same laws of like, gravity, for example.

I think the 2025 will be a complicated year for me to communicate with you because it's not going to really happen in a quarterly matter. There'll be cut offs with deliveries, so you'll have to take a step back and look at the whole year. And the comparison basis effect also might make you feel that T3 is not very good, T4 is a bit disappointing. But the big picture is that there are some positive signs, but not enough to expect a full recovery. I mean, in economics, more than really happens.

It's what you think is going to happen. If you think that tomorrow is going to be better, then you're going to spend more whether tomorrow is actually better or not. In China, we are in a situation where some steps have been taken which are encouraging, but how long are they going to last? We don't know. The real estate market is going to remain quite sluggish for some time, but that doesn't stop us from recovering.

Look at Japan, for example, and the real estate market there, which has been sluggish for a very long time, and yet we have good performances in Japan. So I see some positive signs. Now I'm not going to go so far as to say that structurally we are ready for the recovery. It's a bit early in the day, but we are very resilient and we're building on that resilience, but it's a bit too early to draw any conclusion. And I'll go even further by saying that for this year, it's more interested interesting to look at the, real value rather, than the percentages.

It makes more sense. And, yes, for the rest of your question and ready to wear. So we've always wanted to have different metier to balance things out, balance out our regional presence. This was our desire with FlyOnCon to invest in China, but also in Europe and also in Japan. And here we're integrating now, The Middle East.

So we want to have something integrated and balanced. And we have the same ambition for the divisions we invest in, lever, but also in jewelry, etcetera, etcetera. We want things to be balanced but not artificially. So we're not going to sabotage the lever division to have a nicer division elsewhere. And that can be the trap if you think too much through the lens of percentage.

So we do invest quite a lot and our objective is to balance out the different divisions. Now to go a little bit further on that, inside the Metiers, we want to have also some balance. We do want one model that drives all of the growth for lever goods, for example. We want many different items to be successful. So for that diversity, we were quite successful.

Three main successes or four, rather, sorry. There are many successes, but I'm only going to mention three of them. We had a shoot, for example, that took up quite a lot of space and then jewelry, which I mentioned, and ready to wear, which led us to discovering a very loyal customer base. And in spite of everything that my teams do, I answer the questions which people advise me not to do. They tell me to stick to the message, but we have great clients.

Our lever client base is a bit broader and more diverse. But for ready to wear, I think that our clients are slightly more exclusive, a bit more resilient, and they have more of them. So we've probably won them over from other clients for both men and women. Okay. I'm going to continue down the road.

Eric Dualgoete, Executive VP Finance, Hermes International: Sorry, Luca.

Axel Dumas, Executive Chairman, Hermes International: Edouard Robin Morgan Stanley (NYSE:MS). I have two questions on the products on leather. You have exceptional performance, 18% of the year, 2021 over the quarter. This is above what was indicated to us here last year. We've spoken about volume growth of 6% to 7%.

So if you could come back to the explanation and also give us indication of the level of inventory at the end of the year. It appears that the inventory totally at two twenty days above your historical level. Can you give us a breakdown or an indication per category of product? And the second question to come back to jewelry and watches, there's a divergence in performance that we haven't seen in many years with the excellent performance of jewelry and less so for watches. If you could give us the reasons for this divergence, please.

I'll, we what is our objective, Eric? Six, seven percent of capacity on leather, says Eric, to which we add the price effect, which is 9%. And after the space on delivery means that some quarters can be better than others. So we have very strong delivery end of twenty twenty four, which explains that we're slightly above our forecast. But the pace in the middle medium term remains identical.

So some because sometimes I ask my teams a little more, so I don't want to wrongly communicate with you. No. Frankly, the quarters play a big role in the comparison basis and then the desire to succeed of our teams. And it was a wonderful year in '24 results, but difficult in terms of stress and work. It was less simple than years where everything was simple.

2024, we pay for the errors and the good decisions come time and again. So this desire to succeed, so there was a real, dynamism in t four. So the levels of inventory for leather are slightly lower than what we have normally. And the reconstitution of the stock because '22, '20 '3 were years which were very tense, which is below our objective. So if you look at 2024, it's below what we were doing before.

I've been the head for twelve years, and I'm not just thinking of three, four years back. So there's a sort of renormalization with our inventory going up. But Eric explained it well in terms of the gross margin, which impacted us and which is slightly different for leather, where I must say, whether it's The US or Asia, wanted to end the year, you know, with in fact, we were not asking for so much. And so it's dynamic, and it's nice to know that there's always this demand and there was this desire of our customers. They wanted to, please, themselves.

And jewelry, watches, these are two divisions which are quite different, really, although they're classified in a hard luxury category. One is very feminine and one is more masculine. Was it more difficult? We have a success continuing success with jewelry. We have a creator, Pierati, who's very good, very strong, and that's the first media I was in charge of in Hermes.

And when I was in charge of it, who was the one person I was replacing said, don't worry. It's so small that it won't be visible in the accounts of the group if it goes bad. And I took it as a compliment, and my spouse told me, no. That's not at all what you should have understood from his comment. And today is very big, and I'm very attached, and I'm very proud of the team and the work, which is much better than what I had done then.

So it's really been able to put forward a different aesthetic of, very different to what's done at the Place Vendome. And right from the beginning, we were very strong, where women, you know, were not being offered this jewelry, but that they were buying for themselves. Watches was always a bum and bust. The market as such was very challenged in 2024 for all the brands. And I think we better resisted than some, thanks to our retail network, which we have, which is ours.

And to take back my initial analogy, I think we also made some mistakes, and so we have things to improve in house, and I remain very confident for the follow-up. I hope because we have a fair amount of investments to come and watch us, so it must work. Luca, I go through the whole row as I promised, and then I'll come back. Luca, good morning, Axel and Eric. Two questions on production, if I may.

You have a cadence of employment, which are great and focused in France. Given what's happening internationally and the fact that the new American administration is presenting the invoice, as it were, to the net exporters? Is it conceivable that you can create production in The USA for, some divisions, for them to the divisions to be more favorable in terms of the capacity that you could find there to minimize or at least to reduce the customs duty effect that may target the sector. Second question, you are amongst the players who are most integrated upstream, and, that is an important quality, at least in ready to wear. And given the fact that ready to wear is becoming more and more important, is growing, in your plans, do you have any direct investments planned in this division, in this activity?

Thank you. Luca? Well, first of all, one of the things that worries me the most is the evolution of geopolitical relations at the moment. You summed it up well. The figures speak for themselves, producing 75% in France.

Ten Percent of our sales are in France. So we produce in France and we sell all over the world. So we do need, commercial exchange that is balanced. And we've always had the weakness to believe that, you know, trade brought people together rather than driving them apart. Is that still true?

I mean, we have the right to believe things in your little corner that others don't believe in anymore. That's what it is, exchange, commercial, cultural enriches us rather, than the contrary. So it's a source of concern. But that being said, it's not the custom duties that worry me the most. It's more the tension amongst the peoples.

The house is what it is. Hermes is what it is. Nearly 90 years old. We've known custom duty is growing and, you know, up and down. And Eric, Eric, if the customs duties go down, we increase the price to make up for the customs duty because often our price, we don't have any marketing policy for price.

We have increased the price as a result of our increasing cost of production and monetary fluctuation. So next time, I can tell you that next, we increase our prices because of these two factors plus customs duties. We'll increase, and our American customers will understand, will remain loyal. And those who find it too expensive will come to benefit from our hotel infrastructure in Paris and will buy at the. So I regret this, but I'm not especially worried, particularly worried, if not.

Famous last words, is how I take things, but and obviously, you are right. It's a vertical integration policy means that we will tend to make investment to integrate and protect our production capacity, Ready to wear and jewelry are divisions that are slightly more complicated to integrate because each one has, their specialty, and you need many to be autonomous. One is better than for setting. I'm talking of what I know better, one for better for stamping, lost wax castings, they're more diversified and wide. Nonetheless, we've strengthened this year in jewelry.

We've taken many shares in companies. In the shoe as well, in shoes, we have a real production unit in Italy, which is growing. We have a capacity of 200 people. Thank you, Wilfred. And in the ready to wear, we are beginning to take shares.

We are trying to save to help well, to help the French ecosystem because you still have a ready to wear ecosystem, for ready to wear in France. The shoes are in Italy. But, you know, production for leather, we make a lot of leather clothes, so forth. So it'll go in that direction, but it's slightly more complicated than in leather. Once you do learn the saddle stitch, then you know how to make all the bags.

But that's the sense of our history with pros and cons. With everything is going well, that's great because it's fixed cost. But when things are not going that well, bad luck, you've got too many overheads.

Moderator/Unidentified Speaker, Hermes: Good morning. Alan Vergier from Goldman Sachs. Two questions. First of all, on the growth of the scope, to which extent do you believe that this can lead to extra growth later on? And have you changed your plans in the opening of newer stores around the world?

For example, in China, where it's more volatile and more favorable in The US in spite of the tariffs? And secondly, on operational margin, is there a big difference between the regions and the divisions? And what is the volume level that you need to keep stable margins or margins that grow slightly year on year? Well, I'm going to start off, Eric. Well, it's quite interesting your question because when I started out managing the group in 2013, I'm looking at Florian to make sure I don't say anything silly, although this is filmed.

There were 313 stores at the time, and now we have 293. So we have fewer stores than back then. So it's not by opening more stores that we became more successful and increased fourfold our revenue. So we don't grow our scope by opening new stores. However, it's not necessarily the same stores in the same space or place.

They might be bigger as well, which allows us to give more space to the different mid year. You can look at our strategy for balancing out the divisions. And if you want to balance out the divisions, you have to be able to show them off in the stores. We could have decided to have 500 stores all the same size, but you would only have had small leather goods, which would have been, you know, probably not the right way to go. So that's the first thing to say.

Secondly, and I'm a bit embarrassed to say it, but never mind, it's that our long term strategy is a long term one, and we don't really tweak it. Four, five years ago with Florian, we said, okay, The US remains a market that we need to conquer. So we are opening stores in The US, and that's working out quite well. And we can go to new cities with Phoenix and Nashville in 2025. I'm trying to find actually a little bit of time to go to Nashville.

And sometimes, we have two stores in the same city like in Miami, for example. And in the LA area, we have free stores. So yeah. Now regarding our policy for China, it's actually even worse, so to speak. And, it's what I answered actually this morning.

At the time, I was a CEO, and Florian Karinch of Retail was head of China. And in 2010, we decided to have a strategy whereby we opened a new store in a new city every year. That was fifteen years ago. And we've been rolling out pretty much the same strategy, and it seems to be working out. So I must admit that we do have a strategy and we kind of stick to it.

We are not specialists when it comes to seizing opportunities swiftly. And likewise, we continue to invest in all our zones, even the, long standing zones like Japan, for example. And I'm very proud that we've opened two new stores in Tokyo. There are fewer stores today in Japan than ten years ago. And we've got a fantastic new store actually in Japan.

Ginza is a lantern, and our other store is like a glowing burning candle. Now for the margin before he comes up with a proper answer to all these questions, we never make any decisions on the margin. The margin is a consequence of our strategic decisions. And in our balanced theory for resilience, It actually only works if you got the same margin everywhere. So we are very integrated.

We have more margin when it works well, a bit less when, there are some headwinds. But for the product, in any case, we try to have the same margin across all the divisions so that you don't have more margins on the desirable product than on the one that is harder to sell. Because ten years later, it might be the other way around. And if you have the same margin everywhere, then it doesn't affect your margin rate too much. And we try to not fall into this trap of saying, okay, this product is saying well, we're going to push up the margin.

So our business model is about having very similar margins so that when the desirability of one product changes and goes to another, it doesn't impact things too much. Well, I think you said pretty much everything. Our margins are indeed very consistent because we also have our clients bear the extra cost when we export abroad. Our fixed costs, well, that's what we said earlier about the vertical integration. These are the kind of elements, fixed costs that can impact profitability down the line line.

But structurally, if we have higher production costs, then we essentially pass this on to this market. But of course, that will vary from one market to another and from one year to the next. We have another question over there.

Eric Dualgoete, Executive VP Finance, Hermes International: Next (LON:NXT) time. Sorry.

Unidentified Analyst: Hello, Susanna.

Eric Dualgoete, Executive VP Finance, Hermes International: You need the microphone. That's the only thing.

Axel Dumas, Executive Chairman, Hermes International: Congratulations on your results. I wanted to come back to the question of Lucas. You said that the consequences of custom duties, if applied by The US, would be absorbed in the price. You did an average of about 8% of increase of annual price in the last years annually. Do you intend to anticipate the same trend this year?

And how does the application of these rates pull things upwards? I understand that you will not be changing your method of production, but have you done any overstocking of certain products in The USA in order to offset the inventory, which could be affected by the customs duties? Thank you. Questions are cruel because these are probably good things that we should have done but which we didn't do. Firstly, the price increase of for the 2025 are done over the year.

We doubt of the vocation of doing so. We try to be covered over the year. They're six to 7% this year. And the big major disparities are related to forex, we hedged all year long. But which are the currencies in 2026?

Do we need a my dream? Everybody panicking in communication. But if we could not increase prices because the dollar goes up and not the euro, then we'd be delighted as well. You know, we don't have a growth policy by price or scope. The growth we are looking for is organic growth.

So I can't say to you, unfortunately I mean, I can tell you that it'll be more or less the same thing, 3% inflation on the raw materials and our production costs. But then that could be offset by a contrary change in in in currency. Every year, I say, oh, currency will go in the right direction. That'll be great. I won't need to increase price.

That doesn't always happen. Then there's the exception of the customs duties. If we applied customs duties, then we'll see. At the world's level, international level, I don't know whether a certain percentage will get to the needle to change worldwide. But our policy up until now was to put custom duty in the, you know, in the production costs and have them vary according to the duties.

7% that Axel was mentioning that was retained in 2025, its aim is to cover the cost price of our objects that has increased by 5% and a part only a part of the negative impact exchange currency effect, the negative impact which is of EUR 200,000,000 in 2025. But we're doing that reasonably and which doesn't cover all of the negative impact of the exchange rate. And excess overstocking in The U. S. Our American teams are very dynamic in Q4 as you were able to see in the figures.

They could have kept a little more to my taste, But then, you know, we're in the multilocal, so each country manages themselves with their margin of liberty.

Unidentified Analyst: This is Push from UPS. I'll ask two questions, although I probably could ask three because I waited quite a long time. So one will be easy. Financial second one is a little bit more philosophical. So the financial question for Eric, how should we think of the margin for this year?

I know the margin is not the objective, but I guess what are the known things at the beginning of the year in terms of FX? I believe you had last year at the beginning of the year, some exceptional hedging gains. So how should we think of FX for this year? And anything else? Basically, I want to know if the margin should be up or down.

And the second question is for Axcel. It's more related to the leather goods category. I think investors have been used to the leather goods category being quite resilient in the sector. And we are seeing now something that has never been seen before, which is leather goods category is actually quite weak, obviously not for you. So I'm just curious if you have any high level observations about that.

Why do you think that leather goods category is weaker for your peers? Could it be that the customer has changed, they focus more on the quality, craftsmanship, resale value? Anything you could share, that would be really appreciated.

Eric Dualgoete, Executive VP Finance, Hermes International: So regarding the profitability, we consider that the level that we have today of more than 40.5% is remained quite high. And as I mentioned before, we are not going to pass to the customer the negative currency impact this year. So this should show a slight negative impact on the gross margin. This is it. Okay.

Thank you.

Moderator/Unidentified Speaker, Hermes: So I

Eric Dualgoete, Executive VP Finance, Hermes International: will take the philosophical question. Of course, it's our one of our core METE and it's the historic METE of Hermes. But when I did my first internship at Hermes, before it was most striking because it seemed very quick now, it seemed very old. But the turnover of the group was 54% with silk and 9% with leather. So there is some change, I think.

And me, I'm quite an adept of the game theory more than the division. So, my job is that all the can succeed, all the have similar margin, and then the client will pick maybe in twenty years. I don't know if I hope or not to be there to run the result. Maybe I should do something else at one point. But in twenty years, you will have the first metier will be jewelry and shoes and the rest.

So we need to be in a position to deal with the unexpected. So that's the thing. And we are lucky enough to have an incredible result in Leather Goods. Very difficult for me to answer you without looking pretentious or snub on that. I do believe that we have an incredible craftsmanship and our artisans are unbelievable.

We still have the supply chain to get the best letter possible. It's a struggle to find this kind of quality of leather less and less. And with the industrialization of farming and all that, it's been a difficulty. And that's why we invest so much in tannery to try to compensate by having investment. But I think, yes, everybody I think we don't have the same product in a way.

In a way, I will say our cost of goods in leather is sometimes is much higher than the selling price of some of other bags. So it's not the same product. Is it good or bad? I don't know. Maybe we are just terrible at managing cost of goods.

Axel Dumas, Executive Chairman, Hermes International: Aurelius Dusan

Moderator/Unidentified Speaker, Hermes: from HSBC. I've got two questions for you. The first question is on the early year trends. You told us that China was difficult to decipher because of the timing of the New Year celebrations. But what about the other regions, about The U.

S? Is it still booming as in Q4? And still on Q1 of twenty twenty five, could you maybe give us a flavor of the sales for twenty twenty five Q1? Is it going to look like Q1 of twenty twenty four? And what about price increases?

Okay. So every year, I have an idea of where that figure is going to go, and I don't tell anyone. This year, I have no idea, so I'm definitely not going to tell anyone. It's too difficult to forecast, to be honest, because, a bit like Christmas in q four, it can go either way. And it's the same with the Chinese New Year, the date of which changes every year.

What I truly believe in is that there is no overall broad trend that has been impacted by any of that. But then if you look at the figures at the end of the day, there might be some small changes. China, it's too early in the day to say anything. In The US, very booming q four, but they might not have a huge amount of stocks to help them in Q1. We were impacted by the fires in Los Angeles by the blizzard, but the demand seems to be there.

So it's going to be difficult for me to talk to you about the results in 2025 quarter by quarter. I think you'll need to take a step back. But the overall trend of demand and desirability are there and seem to be very similar to in previous years. Now you also have to take into account that we are going to be comparing things that are quite different with production capacity, which is different. But in any case, it will be interesting.

In any case, I don't see any global shifts in our industry. No huge changes in trend. And in our LMS scope, I can't see any huge changes in desirability which goes one way or the other in terms of footfall. We have a lot of very loyal customers who come to us in China, but I can't see a recovery on the horizon. And The U.

S. Foothold is quite important, but what about the stocks? I had to explain the figures when they were not very good for lever. I remember sometime back a few years ago, and we had a lot of people who were sick at the time in the workshops. And if these, you know, viruses go around, you have a lot of people who can't turn up to work, and that can lead to a free or 4% drop in production.

And then you also have the stock effect. You can have huge stocks and then sell them at the right moment. And sometimes demand is there, but you're out of stock. And if you do plus 15% on plus 15%, I mean, when you're looking at the percentage increases, it can be a little bit misleading. We had billion of revenue and half of that was in Asia and Pacific, thanks to the Chinese New Year.

So it's going to be a very high comparison point. Okay. I'm going to let the microphones decide who asked the question. Can you tell us a bit more about the evolution of the revenue in Asia and in The US? And tell us about the main opening and main renovation of stores in 2025.

Well, it's actually quite amusing for us because, for us, it's really the countries that matter when it comes to nationalities. For example, take a look at Japan. Our success in Japan is driven by the Japanese clients, unlike other players where people buy in Japan but they're not Japanese. So we pretty much sell to Japanese people in Japan, to Chinese people in China, etcetera, etcetera. So we're not even really performing any analysis.

I mean, Eric will probably tell you the opposite. If you do so, please do it kindly and gently. But, yes, it's quite striking in Japan because everybody is affected in Japan, and we are not. Now there are some explanations to that. Maybe we don't have enough stock, so the capacity is not there.

Or is it because our clients are so glad that they find the products they want in their country and they think that they won't be able to buy it elsewhere because each store picks what they have. So they don't go and look elsewhere. They buy at home. And Japan is among one of the cheapest countries in Asia, which hasn't happened in decades. So we don't have clients who are looking for a good deal, so to speak, and if you want to use tourism to that end.

So this is why we sell to the nationals in the countries where we operate. And the two big exports is Middle East and America. These are the countries where we've got a larger export client base. And The US, it's true, they're very sensitive to exchange rates. They'll look at the exchange rate and maybe buy elsewhere.

But the Chinese customers have bought their products in China, not elsewhere. And now you could have contradicted Miao. I am used to it by now.

Axel Dumas, Executive Chairman, Hermes International: Stores, I said Phoenix and Nashville. Florence Florence today. Florian Con will be leaving in a moment because he's going for the opening of the Florence store today. Kitsbull would allow the teams to go skiing. Felix Felix Nashville in Asia Pacific, Shenzhen and Guangzhou as well.

And we're closing in Tokyo because we've opened elsewhere. So so we have five openings over the year. 20 projects of enlargement as is the case every year. Yes. Yes.

So we have the enlargements. Do you want to tell us? It's spread out in France and Europe, America, Asia Pacific, even Japan, Omotesando, or in The Middle East, Dubai Mall. So it's very well balanced for all the regions. Nokklesut, if you want to make a case, a theme, kids pool and Nokklesut this year.

Who has the microphone? Who has the microphone? Can I ask a question? A question on your growth driving force. You showed an interesting growth, average growth of ten years, fourteen percent.

Correct me if I'm wrong, but I think that this growth was driven widely by high gain volume over this period. Now you've come to a size of 15,000,000,000 in revenue, and we saw that 2024 price was an important component of this growth. In the future, do you consider that you have to expect a kind of slowdown of volume growth, which could be offset probably by a higher valorization like in jewelry. This was particularly true. A METE, a division like Lethe, would it be the where you have the highest average prices, could it benefit from a valuation strategy proposing products with an average price which would be higher offsetting, therefore, this, you know, standardization of volume?

Several subjects here. I can't tell you exactly what will be the growth of the group in ten years' time. If you'd asked me ten years before, I had done some good calculations saying I'll retire 65, grow, we'd when we said we'd go by 7% a year, we thought at that time that it was great and very ambitious, which led me to a revenue of 12,000,000,000. Today, I am presenting 15,000,000,000. And I said to myself, maybe I should leave on the retirement.

I thought of age rather than the revenue. So sometimes, you know, you say pinch me, I think I'm dreaming. And if it can, 15% seems of growth is seems enormous. But in your question, you must distinguish but you did so the let me specify price effect, what do I increase because my cost is increasing, and the value effect, which is very different for me. And that is where you are right.

We can't follow. That's not an artisanal model. The volumes as such, that doesn't mean we won't grow in volume. You need a value effect in jewelry, for example. We have a lot of, silver jewelry today.

Gold and gold is diamond. For leather, I think we've already done well. We have a value offer, which is very strong, but we are making effort in valuing watches, silk and textile, ready to wear is highly valued. And thanks to some of the companies The MS model goes through products with high added value, but where you have to be careful, and I talk about the ethics of aesthetics with my team. That's not a marketing plan.

You shouldn't just doing value for the sake of value. There has to be an aesthetic reason. It has to be beautiful. There must be know how. I'm very proud of our ties, which are not the most costly of them, expensive of the market.

They're not always worn by everybody. My vocation is not to make expensive ties just to offset or compensate for the, like, drop in volume. There has to be a reason. What I really try to do is not to be, you know, held by the finality. It's to keep the way of doing at the heart of the system.

So value, we can do value, but it has to have an aesthetic sense as well. If it's too expensive just for the sake of it, no. We have a normal trend to have such incredible artisans that they can work with incredible materials, which could be more expensive and gives products that are really quite impressive. But we'll never say, let's do a little more of this just to increase the value. No, it's the product that's at the heart and the desire to do so, make them or not.

And their products that we love and they don't work, we don't only have success in MSC. And that's great because if they're only successful objects, then I wouldn't have attempted enough. There's product, there's know how, there's material that drive us. Then, you know, we'll see whether this would be said. There's a part of risk we sell desirability, dream.

That's the the the the salt of our industry. Juliette Garnier Folomond, what can you what can what could you bring to you? And in fact, can you talk about the extension of a range for beauty? Do you intend to go more on Haute Jewelry, Haute Jewelry? Three points.

Okay. Haute couture. I say this honestly. It came out in an interview that I had the pleasure of doing. Are we thinking about it strategically or not?

I'm not so sure. But once we've said it, we thought that was a good idea, actually. That's nice. Honestly, I thought that the teams are gonna get angry with me saying, what did you say? And they said, oh, very nice.

We've been thinking about it for a long time. What are we interested in when it's haute couture? It's a know how. We already have a very high level of quality of leather. That's incredible.

And so we said, why not? Why not? What will it bring? What is so it'll be bring, problems, but let's hope it'll also bring pleasure. And, so I'm very excited about Haute Couture.

We'll see what it gives, but I think it's very nice. And, especially since it didn't come through strategy or marketing where we just said to ourselves, why not? When? When? Oh, I don't know.

Ask Guillaume to send the production. When do we deliver for the podium. Oh, by when well, I guess twenty twenty six. We'll try the time that is put in place. But if it's twenty twenty seven, why not?

You know? The idea is to do things well. For beauty, there's several subjects, depending on the vocabulary. We are what we call beauty is makeup. We'll continue with makeup to extend our range in certain products that we will renew.

We will launch, for example, the silky lipstick this year. Very excited with the success of beauty. I think we've done incredible work. I have a preference for the lipstick, but that's my problem. Nail polishes are very good too.

So we'll continue. And then we are preparing ourselves. What has another word is cosmetic skincare. So we have to find the right way of doing it. The laboratory, it has to be ideas under the, you know, we talk about TechnoCraft with Apple, you know, discuss this with Charlotte, who's in charge of our communication.

We talk about, you know, similar approach for the skin cam. I'll test it on myself to see whether we ought to commercialize it or not. And then for jewelry, it's a subtlety that we have escaped to you, but we don't say haute jewelry, but we say haute bijouters. We remain bijouters. In in in in, as we say, Chaucer and other companies called the Sullier.

And behind the idea of the haute bijou tray is the idea that we're quite different from the Place Vendome, which starts from a big, you know, gemstone and works around it. But we base ourselves on the design. There's a lot of paving. There's a lot of drawing design, and then they put it in shape. So it's a bit different as an approach.

So we continue to do with a lot of success. The teams under the ages of Wilfried Girond want to maybe, because we have a presentation every two years, maybe want to accelerate this pace, but we'll see whether you know, because for me, what the time of creation is very important too because our collections every time at our scale are a small event. So it mustn't be with too many constraints. We're lucky with the Pijou three to to be off the fashion calendar, so it must have a sense. So I say, yes, there'll be more and more, but only if we it's something that we like.

And with with Pierardi, we're submerged with design because he's amazingly creative, but we're not going to force ourselves to do so. There's no marketing plan behind this. I explain this every time there's no marketing in ECMAS, that doesn't mean that we don't get 50 CVs, day that I want to join your marketing department. So communication isn't perfect, is it? But that's more or less our development plan, but we've got lots of things on which we're happy.

The new bags that will be coming, we're always looking for new leathers. Very excited about the handwoven that we do in Nepal on cashmere shawls. So in all these divisions, there's a lot of projects for those who are interested in it, like myself, very exciting.

Moderator/Unidentified Speaker, Hermes: Two questions on my side. Could you tell us a bit more about the fires in California? And tell us about the impact it had on the stores and will continue to have maybe on the stores? Second question on China. Could you maybe quantify the impact of the Chinese sales?

Will they drop or not like your competition? Well, there are two questions I don't really want to answer, but I will do my best. It's very difficult to quantify for us, the effects because somebody who doesn't buy a bag because the store is closed will find it elsewhere. So the impact has to be looked at from a bird's eye view. Of course, there are some losses, but it's difficult to quantify these losses because they tend to pop up somewhere else as a win.

We did have a store which was quite close to the fire, so we had to, there was a power cut and there was another store that we closed for safety purposes. And then there were climate events in The US, be it the blizzard in the North or the events in Florida that meant that this year there were ups and downs that all of this will be offset elsewhere during the quarter. But I don't think there'll be a huge impact or not the kind of impact that you can see overall in the overall figures. But it was a difficult time. And now for our clients in China, it's a very important customer base.

Greater China has grown less than other countries even though they have grown. So inevitably, the share of Chinese clients has dropped relative to the total number of customers. Do we have other questions? People over the phone maybe. Ladies and gentlemen, you can now ask your questions online First question from Thomas Chauvet from Citi.

Over to you. Hello, Eric and Axel. Your net cash increased to €12,000,000,000 This very high figure, is it going to lead to extra bonuses, an extra dividend? Are you going to buy up another brand to maybe balance out the risks even further? Or do you not want to grow too much and become ubiquitous?

Second question on the strong increase of revenue with the strong increase in headcount. It was plus ten percent and twenty five thousand employees altogether, I believe, for last year. How do you manage to have a corporate culture that everybody kind of buys into and understand in spite of this very rapid and strong growth? To which extent are you remaining true to the values of your great grandfather, Axel? I know that society has changed quite a lot, but you're nearly at €20,000,000,000 of revenue.

How do you keep this original spirit of a workshop? Okay. So two tricky questions here. On your first question, we are going to stick to our cash flow management strategy, which is that of the third. So a third of investment, a third of value sharing and dividend, and a third of cash flow so that we precisely can weather a difficult year, which I'm sure will turn up at some point.

One example, during COVID, we were very happy to have our available cash, which allowed us to not decrease the dividend, which we've never done at Hermes. And secondly, it allowed us to pay everybody's, everybody's salary without having to ask any support from the government. So it's always good to keep some cash for a rainy day, let's say. So strategically, there is no change in our policy. We're not going to be deploying capital to buy up other companies.

We might need capital to beef up our vertical integration because that is important to us. Now I don't want to say, you know, it's never going to happen, but it's not our priority right now to buy up other companies. Now we know how to do Hermes. I'm not sure we know how to do anything else. I'm not sure that we could buy up another company and impose on it the Hermes model.

I think it'd be counterproductive. And actually, you might have seen this year that some people want to do a bit like Hermes, but it doesn't really work out at the end of the day. Because the success of Hermes is down to the things that we do really well and then the things that we do really badly, but it's all balanced out and gives us this kind of unique positioning. So, unless you're a deviant, you know, it's, you can't really do bad things to other people and hope that there are good repercussions for you. Okay.

That's the end of my psychoanalysis, for today. But that leads me nicely into your second question, your question which is, well, about my main cause for concern at the minute. In other words, how can we keep this mindset and this culture with a company that's grown to 25,000 people? We've got 2,300 new jobs this year, which means that at least 3,000 people have arrived, people have left, retirement, etcetera. So how do we keep this culture going?

It is a strategic issue. We are working on it and we work on it because we will only be successful if we can keep this culture. We need to remain at this kind of human scale and keep this entrepreneurship spirit. This is why the different divisions are independent. The countries are very independent.

And actually, I fight against bureaucracy at Hermes with more or less success because every company that grows tends to increase its bureaucracy. We need to avoid that at all cost. We need to have production units that remain at a human scale. We continue to have lever good workshops with 300 people working there and no more because when you have 300 people, you know everybody's name and you can have a chat with people. We know that if we had lever good production units with 500 people, productivity would go up.

However, it is important for us to keep this kind of human scale. And then there are two important issues. First of all, recruitment. We recruit a lot of people and we want we need to be able to know who is adapted to work at Hermes, who can understand the long and sometimes unclear speeches of Axel Dumas, who can understand the decisions of Hermes. Culturally, we're very Japanese.

There's a lot of chats, a lot of oral tradition, and we try to find a consensus. If you arrive at Hermes and ask who's got the final cut, who is going to decide for everybody else, well, we can't answer that question. It doesn't mean that it doesn't work, you know, that it's not great, but it's just not our culture. And then a lot of training because that's also our future, cultural training and managerial training. I think a company is only as good as its managers work and the middle managers work as well.

So we've invested a lot in training and in imparting our culture to newcomers. And people are really at the heart of Hermes and Hermes' future. And when it comes to people, you know, it's not scientific, so we do our best. But it's really at the heart of our future development. If we sacrifice people, then we lose the whole magic of Hermes.

So at Hermes, the true star is the craftspeople and the people selling the product in the stores. And I'm always amazed by the technical ability of our craftspeople and of our salespeople. If I'm a bit concerned, at any point, I'll go to the and see that they are clients. Maybe Florian is sending me fake clients to reassure me, but I do see clients, you know, talking with our salespeople and all of that is quite amazing to see the relationship and the bond that they have. So I'm always amazed, and we need to keep that.

That means we need to continue to work with characters, with people who don't really necessarily fit in anywhere else. But, yeah, 3,000 new people a year, it's quite a lot. And it's actually a greater cause for concern than the margin is. Apologies, Eric, for that.

Axel Dumas, Executive Chairman, Hermes International: Another question. We'll take the last question online. That comes from Claire Bullough from Challenge. I have two. First of all, to react to Thomas' reaction to your growth that one maybe one day you'll be at 20,000,000,000.

It's simple and complex question. How do you explain this positive anomaly of Hermes? This company, which is the only one to have this growth rate and margin, while we see for the other actors of this sector, it's becoming more complicated. And my second question is the Walmart (NYSE:WMT), you know, there's certain issues that you're protecting. How do you protect yourself from certain phenomena?

It's the last question I'll be able to talk to take you up to 2PM. I have no explic explanation other than the fact that we try to do our work well, do it with authenticity. And I believe that it may be the difference communication is the seventeenth division of LMS. That's important where we don't do marketing. We don't try to create an illusion by paying people to wear our products.

I think there's a kind of authenticity, and I also believe that, it's not the success of MS, but the world came to us. I continue to believe that, there's been psych important strong psychological effect of the financial crisis of twenty eighteen saying what is expenditure, what is investment, what is good but finally not good, how many AAA obligations, bonds, you know, sort of transformed. And so finally, there was a return to the true, the art craftsmanship. And I think we benefited from that. And then to talk about the ubiquity of our brands, the strength of Hermes is that we don't do that much volume.

After all, we do more volume, but not that much volume as compared to other houses. We remain our production of bags is quite artisanal. We do more volume in perfumes, of course, and some would say maybe not enough, not enough. Agnes de Villa will say that. And then I feel like saying that what's important you know, we have to remain faithful to ourselves.

We're called Hermes, so we like to talk about great tragedy or myths. I very strongly believe in the myth of Ulysses. We were asking the question to Jean Pierre Vernon saying, who is your favorite hero? And he said, everybody says Achilles. He's strong.

He's chose glory. Even he's ready to die. I like Ulysses because Ulysses is clever. Apparently, parenthesis that, his god is Hermes. So that's that's a good thing.

And he says horrible things, but he continues, never stops. And when even when things are well, when you they suggest that he become a god, which for a Greek is not bad, well, he does continue. And others could have stopped, but he continues in his project, which is go back to Ithaca. So, you have to remain faithful to yourself. And sometimes it's more difficult in the success than in failure to remain faithful to oneself true to oneself.

The only difference is that we try to remain true to ourselves. And the one good thing that we've done is to remain true to ourselves when things were not going well and especially when things were going well and not overdo it, you know. But then we're very happy with the results of 2024. And the fact that we really remain very demanding on quality at every instant, I'm not saying we manage every time, but it's really important to give importance to creation. That's essential.

We are one of the rare houses where the artistic director is at the executive committee. It doesn't depend on a marketing department. So we've really tried and then, you know, the attention to granted to each one and the multilocal and the multidivision, the head of Ready to Wear is independent like the boss of USA is very independent. So all of this leads to a dynamic, which is good, but on which you have to be remain very humble. World is genuine very quickly.

You have to adjust. And, I try to draw satisfaction first and pride for the teams, but not thinking that I've found the, you know, the the the magic recipe of the ready mix. No. I do it with great humility. So I've led dupes.

Led dupes. I have a corporate answer. I have a corporate answer, but I'll give it both We have no comment on this subject, the fakes on fakes. Counterfeiting is something we take very seriously with its economic and social consequences. You know, difficult to know what exactly to think about it apart from the fact that it irritated me.

I annoyed me. Sometimes I found the comment in the press at a time when everybody is talking about, oh, AI, will it take a copy and with the brokenness protected, so making a copy like this is quite, you know, detestable. It's really, you know, sealing the creativity of others. So that is the negative side. But then, you know, we have a watch on social media, and it was quite touching to say we respect our mess.

We can't afford it, but in the meantime, I feel like dreaming about it. So nobody bought this fake product thinking that they could find an equivalent product. They know about the difference in quality, and there were things that were quite, touching, saying we wanna be part of it. We get the feeling we're selling products rather than a style and a household between the two. So I find that, these counterfeiters who allow themselves to do this is something that is really unacceptable.

And the fact that, you know, things make people dream is a compliment. There was no ambiguity, you know, saying my fake watch is like the real watch. It's a recognition know how. I can't go in as quickly as possible into this universe. So it's a beginning.

Some people profited from it because it's really very basic counterfeited products. And and sometimes people were quite touching. So we'll fight it with all the means, but we are dealing with people who know the law very well. And we have very strong teams. We're pretty good people.

We're good at fighting counterfeit, but the corporate answer is simple, but there is an ambiguity in the situation that you have to face up to. So I think, the sermon is over. I'd like to thank you very much as usual. I just like to conclude with a personal note on this subject because I feel very grateful to head a company like Hermes, but I appreciate the values and the people who work in it. I wanted to say that I'm very lucky to come in the morning and to know that I'm going to come across lots of employees of Hermes, in particular, my executive committee.

And it's a great pleasure indeed. So I'm very grateful to have the opportunity of presenting very good results to you. Very grateful for that. And I hope it will continue that we will remain whatever happens true to ourselves, even with, quarters which are too positive or not positive. Thank you very much.

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