Hermès Blames Pandemic For 42% Drop In Q2 Sales

Even über-favored luxury brand Hermès was hit hard by the COVID-19 crisis. In reporting its first half-year 2020 results, sales for Q1 plunged 42% over 2019 comparable sales. For the half-year, buoyed in part by reopening in Asia, consolidated revenues declined 24% (25% at current exchange rates) over first half year of 2019. Moreover, the company says the continuing impact of COVID-19 “remains difficult to assess.” Recall that following shutdowns in parts of Asia (which began reopening toward the end of the first quarter, Europe and the United States went into lockdown, which still are in the process of reopening, with very strict guidelines. Indeed, most Hermès stores in the United States remain open only in limited capacity. Moreover, during the height of the pandemic, Hermès not only shuttered its boutiques but also closed or converted production facilities to make sanitizer and other necessaries.

Store sales for the first six months slid 22%. Looking at the geographical impact, sales in Asia (not including Japan) for this period lowered by 9%, with Hermès noting that sales are improving since the reopening of stores in Mainland China. Japan sales declined 23%, following that government’s shutdown orders for six weeks. Sales in the Americas were down a whopping 42% with 10+ weeks of full store closing in the United States and a very slow and strict reopening process. Europe (excluding France ) and France also saw sales down 36 and 38%, respectively.

At least here in the United States, we expect sales to continue to suffer. First, boutique operations are very limited. Many stores are appointment only, during discreet hours. Furthermore, stock is even more limited than usual. Long-time high profile clients find very little available, with speculation that Hermès is shipping prime goods to other geographical areas, especially Asia. Moreover, for U.S. buyers who engage in tourist-shopping, there’s none of that, as countries are loathe to accept (or outright ban) travelers from the United States.

Certainly Hermès is not alone in the effects of COVID 19. LVMH reported a 38% decline in revenues in Q2. Read LVMH Revenues Take a Big Hit in Pandemic Kering (owner of Gucci) saw revenues fall near 44% in Q2.

Read Hermes 2020 Half Year Results

1st PHOTO: BLOOMBERG
2nd PHOTO: Madison Ave boutique boarding up – PurseBop.com