NEW YORK — It was a virtual circus on Wall Street Tuesday night.
This story first appeared in the May 22, 2014 issue of WWD. Subscribe Today.
Hermès International rode into town with dancing girls, fortune tellers, artists, an equestrian fairground and photo booths to shine a spotlight on its women’s product universe and the luxury brand’s significant U.S. business.
Close to 700 people from around the world trotted down to 23 Wall Street to celebrate Hermès’ fall women’s collection and its women’s luxury products, such as fine jewelry, scarves, handbags, footwear, small leather goods and fragrances — all presented in colorful and imaginatively designed environments. The event, entitled “All About Women,” indicated the growing importance of the U.S. market, which for the first quarter of 2014 is the largest single-country volume producer for the company, just edging out France.
“For us, the U.S. has been a tremendous market for a few years now. We view it as something very important for now and for the future of the development of the house,” Axel Dumas, the 43-year-old chief executive officer of Hermès International and the sixth generation of the Hermès-owning Dumas family, told WWD. “It’s always important to invest in a market we’ve been present in for a long time.”
The importance was further exhibited by the fact that numerous members of the fifth and sixth generation of the Dumas family flew in for the event. On Wednesday, it was followed by a meeting of the regional heads of Hermès worldwide.
For the first quarter, the U.S. market accounted for 16 percent of Hermès’ global business and has been growing very steadily, said Dumas. U.S. sales increased 18 percent in the quarter.
“We just felt it was really time for us to do a significant event that focused on the women’s universe here in New York,” added Robert B. Chavez, president and ceo of Hermès USA. “We always felt that the U.S. holds a lot more potential than we’ve experienced as of yet. We’re doing everything we can to exploit that and take advantage of it.”
Tuesday night’s extravaganza provided an opportunity for Hermès’ top brass, including Dumas; Pierre-Alexis Dumas, artistic director of Hermès International; Christophe Lemaire, ready-to-wear and swimwear designer, and the other product designers and regional heads to mingle with friends of the house, such as Jodie Foster, Scout Willis, Phillip Lim and Martha Stewart. Hermès staged similar events in Shanghai in 2012 and Paris in 2013.
Bali Barret, artistic director of Hermès Women’s Universe, who is based in Paris and is the creator of “All About Women,” believes it’s the diversity of the women’s products that makes the presentation so compelling.
“What is very interesting for me is the diversity and variety of what we’re showing and what we’re creating. We don’t have one Hermès woman. As we have different designers and personalities [creating the women’s products], the way they express themselves is very diverse.” She said she likes to think of it as “beautiful chaos.”
“The U.S. is a big country to Hermès. There are a lot of customers and it’s nice for a great house like Hermès to remind people of who we are and how contemporary we are. People might think we’re a bit traditional and classical, but our reality is very lively and contemporary,” said Barret.
Barret dreamed up various scenarios for Tuesday’s event that featured different rooms and settings to showcase the products. They ranged from a fortune teller from Paris telling guests their future based on their chosen silk pattern, to eight female dancers showing off Hermès swimwear and sandals around a pool setting. In another room, a dancing bags animation featured eight female dancers performing with a variety of handbag styles. To highlight equestrian products, a fairground was created, including horse racing, horse-themed pinball and a bandana photo booth with mechanical horses.
At the Sculptural Enamel Champagne Bar, female waitresses served Champagne with stacks of colorful Hermès enamel bracelets on each arm. Three New York artists — along with a Paris scarf designer — sketched portraits of a female subject wearing silk, and sketches were given to guests as gifts. Another room had an artistic installation of Hermès silver jewelry “floating” on water. Dancers on small stages, inspired by theater, Art Deco and Radio City Music Hall, showed off Hermès shoes and equestrian boots.
Off the main hall, there was a totally white room, decorated with a floral-shaped sculpture and focused on Jour d’Hermès Absolu, the design house’s February fragrance launch. On hand for the event was the creator of all the Hermès fragrances, Jean-Claude Ellena, exclusive perfumer to the house, and fellow nose Christine Nagel, who joined the company in March as Ellena’s partner.
Ellena noted the original Jour d’Hermès, launched in 2012, was inspired by a large painting by Sandro Botticelli showing women dancing among 500 different kinds of flowers. He interpreted the scene as “flowers for women” and used white floral notes — like sweet pea, lily of the valley and freesia — to create a scent that was “very, bloomy, very light.” Absolu has a heavier white floral scent, featuring notes like gardenia and sambac. “I changed the balance,” he said, offering an explanation of why white flowers are so pungent. “The bees don’t see the [color] white so in order to be pollinated, they put out perfume — puff, puff, puff. And it works.” Nagel quipped that women wear scent for the same reason — to be noticed.
Hermès just came off a strong year of sales and earnings growth. For 2013, the company’s net income increased 6.8 percent to 790 million euros, or $1.05 billion, while revenues advanced 7.8 percent to 3.75 billion euros, or $4.99 billion. Through the first quarter, the U.S. business accounted for 16 percent, France generated 15 percent and Japan, 12 percent of global business. Dumas emphasized that it’s critical for the company to maintain a balance in geographic areas.
Right now, the weaker businesses are France and Japan, both of which are experiencing growth in the single digits, he said. In China, he said, two contradictory things are happening. One is the government’s fight against corruption. “It’s not a fight against luxury,” said Dumas, but it’s affecting some categories, such as spirits and watches, more than others. “We’ve been affected like everyone else, but not as much,” he said.
The other trend is that the Chinese are moving toward quality and craftsmanship. They are moving away from logoed merchandise “and very much in our favor,” said Dumas. He said that for the first quarter of 2014, China’s business was up 16 percent.
According to the ceo, Hermès’ approach to opening stores in the Chinese market is not to add as many stores, but to have bigger ones.
“We still open a new city every year in China,” he said. There are presently 21 stores in China, and an Hermès Maison will open in Shanghai in September, only the fifth unit in the world with its own dedicated building and a complete product offering and cultural attractions under one roof. (The others are in New York, Tokyo, Seoul and Paris.) Hermès also plans to open a new unit in Beijing, and an expanded location in Chengdu. The Shanghai store, which measures 12,720 square feet, is in an historical building. “When we do a Maison, we need to have a sense of an architectural statement,” he said.
Elsewhere, the current political turmoil in the Ukraine doesn’t appear to be impinging on Hermès’ Russian business. “We have seen no impact on any of our figures,” said Dumas. Hermès has two stores in Moscow. He said the question over Russian clients will be their eagerness to travel abroad, and he hasn’t seen any impact. Business will increase in the Moscow store if people choose not to travel, he added.
Questioned about the company’s relationship with LVMH Moët Hennessy Louis Vuitton, which owns 22 percent of Hermès stock, Dumas said that legal proceedings are still moving ahead. The fact that Hermès grouped family-owned shares into a non-listed holding company, the H51, to gird it against further advances by LVMH “is a strong statement we are not for sale,” he stressed.
As for cultivating new businesses, Dumas said the company is “making a big push in home furniture.” He said 25 stores carry the furniture collection and he foresees some 40 to 45 units globally carrying the line in the next two to three years. The newly renovated Beverly Hills store has dedicated its third floor to furniture, he noted.
Overall, Dumas said he looks for “average growth” over the medium term of 8 to 10 percent.
“We are not driven by figures, but maintaining the craftsmanship and the quality,” he said. If a product is not on the same level of quality, they won’t produce it. “Our true north is quality,” said Dumas. The scarcity of certain products, such as the Birkin bag, is not by design. He said it often takes three years to train a craftsman, who needs to learn how to make the bags and work with all the skins. Not only do the craftsmen need to be “gifted,” but it takes training. “Usually we say one bag takes 16 hours in stitching, but when they start it takes 22 to 25 hours,” said Dumas. It’s not only a question of the hours of training required, but using existing craftspeople to train them, he said.
Dumas, who assumed the ceo reins in February, called the job “a lot of fun and a lot of responsibility.” He said it was never his goal to become ceo of Hermès. “Quite frankly, when I started my career, I didn’t want to work for Hermès,” said Dumas. His mother had been managing director for production at the company and his father was a doctor. He said his main goal was to work in China, and his first job was in banking in Beijing. After working several years in New York, his uncle, Jean-Louis Dumas, chairman and ceo of Hermès Group at the time, came to see him there and asked him if he wanted a job in the company. “I said ‘yes’ much more quickly than I thought I would,” he said. “Part was a sense of duty. Hermès is a mix of using my left brain and my right brain. It’s rational with a lot of creativity. It’s about creating desire.”
He told his uncle that he would do anything but finance, “and he made me start in finance.”
Among his previous positions at Hermès have been retail director for France, managing director of Hermès Bijouterie and managing director Métier Hermès Leather and Saddlery, chief operating officer, and co-ceo. He worked at French bank BNP Paribas before joining Hermès in 2003.
Assessing the global outlook, Dumas observed: “The industry is quite challenging. Everything is fickle. The clientele is fickle, the desire is fickle. We need to maintain a kind of momentum,” he said.
Since the financial crisis of 2008, the luxury goods industry “has been more resilient than other industries,” he said. Dumas appears to be very happy with the positioning of the Hermès business in the U.S. “We are in the right spot right now.” He attributes that to the Hermès team that has been raising the profile of the U.S. business the last 10 years.
In the U.S., the company has 27 directly owned boutiques, in addition to the Web site. Its most successful U.S. markets are Beverly Hills, Hawaii (Waikiki and Ala Moana), San Francisco, Miami and Boston. Surprisingly, New York doesn’t make the top five.
“We’ve had a very strong growth period since the beginning of 2014. It [New York] is experiencing healthy growth as well, but we have other markets that are outpacing even the New York market,” said Chavez.
The New York market is comprised of the flagship at 691 Madison Avenue, the men’s store across the street, and the Wall Street unit at 15 Broad Street. Next spring, Hermès plans to open its first freestanding perfumery in the world at Brookfield Place in downtown Manhattan. The 1,000-square-foot store will feature several Hermès perfume collections, such as Hermessence (12 unique fragrances exclusive to the Hermès boutiques), the Jardin collection, a variety of colognes and the classics. While the company has never had a freestanding perfumery before, it has a perfumery inside Printemps in Paris.
According to Chavez, over the next two years, the priority in the U.S. is to either move into larger locations or renovate or expand existing buildings, rather than open new markets. Once these renovations are completed, the company will open new stores in Orlando, Fla. and Palo Alto, Calif., in 2016.
Some upcoming developments include:
• In September, Hermès will move into a new 4,000-plus-square-foot home in the Buckhead section of Atlanta.
• In February, the company will open a larger store in Washington in CityCenterDC. It will be two floors and span more than 6,000 square feet.
• Hermès will move into a larger location — a 9,300-square-foot, two-floor shop — in Seattle at The Shops at The Bravern in April 2015.
• In April, it will also open a new store in Miami in the design district on Northeast 39th Street, near Second Avenue.
• Hermès stores will be expanded in Boston (June 2015), Dallas (November 2015) and Houston (October 2015). In all three cases, Hermès will go from one floor of selling space to two floors.
Diversification is a key initiative at Hermès. While the Birkin and Kelly bags continue to sell well, “In the last three years, we’ve had tremendous diversification in our handbag styles,” said Chavez. Several new styles have done very well, he noted. “Some of them take a little bit longer to take off, but when they do, they really do take off. The Lindy has been a very popular style for us. Roulis has become a very popular style,” he said. The Roulis is slightly rectangular, flexible, functional and very understated, he said. He added that the Maxibox and Oxer have also had good reaction.
Hermès has also introduced Maille à Soie, a silk personalization concept created by Barret. A customer can come in and choose between several different silk pattern designs and have a dress, sweater, crewneck or cardigan custom made. She can choose which scarf design and color she wants, and it will be made in France. Chavez noted that the service launched at the Madison Avenue store in April and traveled to stores in Washington, Beverly Hills, South Coast Plaza in Costa Mesa, Calif., and San Francisco — all of which will have permanent homes for it. Maille à Soie is also available in France. Delivery occurs within two months of order.
In an effort to cultivate the next generation of consumers, Chavez said Hermès has launched a silk knots app online and is introducing a new tie app in July aimed at Millennials. The app will interactively show different ties, styles and designs. The fantasy patterns will come to life on the app. In September, Hermès will also introduce The House of Silk on its Web site.
As for what the company hoped to derive from Tuesday night’s extravagant event, Dumas said, “First it’s a statement. When we do any event, we never look at the return on investment. We do it because we build a relationship with our clients and we send a statement of who we are.”
He also said it was important for the company to show its women’s products “in a current way. It’s quite important to do it in New York and to do it in front of the stock exchange. On one side you’ve got the Golden Boys of the Stock Exchange, and across the street it’s ‘All About Women.’”