HERMES

Analysis of Hermes share price

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Trading Hermes shares directly from the stock market is now possible through trading platforms or your bank. However, before you can trade the Hermes share, you must of course be familiar with all the data and information relating to the share and its listing. This is what we are offering you through this detailed fact sheet with all the key figures of this company as well as more targeted advice and information, in particular concerning the historical evolution of the share price, the activities of this company, its partners and competitors and, of course, advice on how to carry out your own analysis of this share.

Elements that can influence the price of this asset:

Analysis N°1

Firstly, Hermes acts as a defensive value in the luxury sector. There is therefore a direct relationship between the share price of competing companies such as LVMH and the Hermes share price.

Analysis N°2

On the other hand, the Hermes Group and its results are also directly linked to tourist flows in the trading regions in which it is most represented, such as France. There is therefore also an important link between its results and growth and certain elements such as air traffic.

Analysis N°3

The economic situation in the United States is particularly worrying for Hermes. Indeed, American consumption in the luxury goods sector has tended to fall almost constantly since the summer of 2015.

Analysis N°4

During your fundamental analyses, you will also have to monitor the evolution of price differentials between the different distribution areas of the Hermes Group's products.

Analysis N°5

Naturally, we will also keep a close eye on the achievement of the financial objectives announced by the group, particularly with regard to the evolution of the company's operating margin, which is known to have a direct influence on its share price on the stock market.

Analysis N°6

All of the buyouts of subsidiaries and other companies carried out by the group throughout the world will, of course, have a direct influence on its share price.

Analysis N°7

As Hermes is mainly a family business, the risk of a takeover bid is very low since the family still holds more than 60% of the company's capital and more than 68% of the voting rights.

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General presentation of Hermes

The French group Hermes International is a company active in the design, production and sale of all types of luxury goods. Thus, and to better understand the organisation of this company, we can group the products sold by the group into different categories according to the share of turnover they generate.

  • Leather goods and saddlery products alone account for more than 49.9% of Hermes' total sales, including bags, luggage, small leather goods, diaries, writing instruments, saddles, saddles, saddlebags, horse riding equipment and clothing.
  • Clothing, footwear and fashion accessories account for around 22% of the company's total turnover.
  • Silk articles and textile products other than clothing account for almost 9% of the group's turnover.
  • Fragrances generate approximately 5.2% of the company's total turnover.
  • Watch products such as watches account for around 2.8% of Hermes sales.
  • Finally, the remaining 11% of turnover is generated by products in different categories such as jewellery, lifestyle and tableware.

The Hermes group markets these various products through a network of boutiques and shops, with more precisely 310 boutiques around the world, including 219 branches and 91 concession shops.

Hermes currently generates nearly 13.5% of its total sales in France and 18.5% in the rest of Europe. The Japanese market accounts for 12.5% of sales. This is followed by Asia-Pacific, which generates nearly 35.9% of sales, and the Americas, where the Group generates approximately 17.8% of its sales. The remaining 1.8% is generated in other countries or geographical areas not mentioned here.

Thanks to its strong international presence, Hermes currently employs 14,284 people worldwide.

Analysis of Hermes share price
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The major competitors of Hermes

Today, Hermes is one of the big names in the luxury sector, which has only a few serious competitors.

LVMH

More precisely, Hermes' biggest opponent is another French luxury giant, LVMH. This group, otherwise known as Louis Vuitton and Moët Chandon and Hennessy, is indeed one of the international leaders in the luxury goods industry which also specialises in the sale of high-end wines and spirits and which also offers leather goods and luxury fashion items since its merger with Louis Vuitton. This competitor is a direct competitor of Hermes due to its presence in the high-end fashion, jewellery, perfumery and watchmaking markets.

Gucci and Burberry

Gucci and Burberry can also be accounted for as direct competitors of this company.


The major partners of Hermes

Generally speaking, the Hermes Group is not very focused on partnership strategies with other companies and there are therefore few examples of strategic alliances in recent years. However, it is still important to monitor any mergers that this group is likely to enter into with other companies in similar or very different sectors.

Apple

Recently, however, we can mention the partnership that Hermes signed with the American group Apple, which was renewed in 2016 following the success of the operation. The two groups have in fact combined their respective talents to develop, produce and sell Apple Watches inspired by the luxury fashion represented by Hermes. These watches use leather straps in several different colours and signed by the House of Hermes. But this alliance goes even further as the watch dials are also inspired by the Clipper, Cape Cod and Espace watches of the Hermes group.

Volvo

In 2019, the group has also renewed a three-year partnership with the Volvo Cars group on the occasion of the Saut Hermes organised at the Grand Palais from 22 to 24 March. The car manufacturer will thus provide the organisation of this event with a fleet of 12 rechargeable hybrid vehicles to transport the riders and guests.

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The factors in favour of a rise in the Hermes share price:

Of course, the Hermes group's first strong point is the company's positioning in the luxury sector. Indeed, Hermes has succeeded in making itself known throughout the world by developing its network of boutiques in different markets. This represents a real achievement for this primarily family-owned company specialising in luxury goods.

The distribution of Hermes' sales worldwide is also one of the company's advantages. Hermes currently generates more than 32% of its sales in Europe, but also reaches highly coveted markets such as Japan and the Americas, with a strong presence in the United States in particular. The Group also has a strong presence in the Asian market in general and therefore in emerging markets.

Hermes also benefits from a variety of important products that touch almost every area of luxury. Indeed, it is one of the most diversified brands in this sector of activity, with varied product ranges such as leather goods, high-end fashion clothing and accessories, silk and high-end textiles, but also perfumes, tableware and watches. It is thus well protected from the risks associated with a single sector of activity and can diversify its sources of revenue while increasing its presence in the luxury goods world in general.

The Hermes group and more specifically the brand associated with it also has the advantage of being timeless in that it is particularly classic and its image is timeless. Thus, the group suffers very little from the effects of fashion and variable economic contexts that most other companies in the sector are subject to.

Thanks to its strong reputation, Hermes is also able to present a very important negotiating force with its suppliers and distributors. In particular, it can adopt price increase policies by positioning itself solely at the top end of the market and secure its supplies and distribution channels, notably through a very well thought-out policy of actively buying out concessions. These strategies enable it to sustain comfortable margins whatever the economic context.

Over the last twelve years, the Hermes group has attracted investors with consistently positive results and steady growth in profits, which explains the rise in the share price we mentioned earlier in the historical technical analysis. It is indeed the best historical performance in the sector.

Finally, the financial health of Hermes' corporate structure should of course be emphasised, which gives it many advantages, such as the possibility of significant investment in its distribution networks, but also regular share buybacks and the payment of a large interim dividend.

The factors in favour of a drop in the Hermes share price:
  • Firstly, of course, it should be noted that the Hermes group faces rather high fixed costs that make it uncompetitive in an increasingly competitive market.
  • In addition, while the Hermes Group has a strong presence in Asia, it is also highly exposed to certain economies in this region. For example, the emerging market of China, which represents a real challenge for many companies, particularly in the luxury goods sector, is also a threat to Hermes due to its strong exposure to this economy. In particular, the specialised press has highlighted the lack of prospects for Macao and Hong Kong and thus the predicted decline in growth for the years to come.
  • As the Hermes Group is a French group that distributes its products worldwide, it is of course also subject to the impact of exchange rate fluctuations, which can be negative and lead to a more or less significant loss of profits depending on the economic situation in the Euro zone.
  • Finally, we also note that the price of this share on the stock market is highly exposed to the sanction of traders following the publication of results. Thus, when sales growth is not on track, we often see a sharp decline in the share price, as was the case at the end of the summer of 2017.
The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

How has the Hermes share dividend evolved over the past five years?

Over the past five years, the dividend per Hermes share, which is a good indicator of the financial health of the company and the interest that investors may have in it, has evolved in this way. In 2014, this dividend was €2.95, with an exceptional dividend of €5. In 2015, the dividend was €3.35. It then increased to €3.75 in 2016. In 2017, the group paid a dividend of €4.10 per share and an exceptional dividend of €5. Finally, in 2018, the dividend was €4.55.

What are the Hermes Group's main business sectors?

The Hermes Group operates in various sectors of activity, mainly leather goods and saddlery. It also offers clothing, shoes and accessories. The group's third segment concerns silk and textile products. It is followed by the perfume segment, the watchmaking segment and finally another segment comprising jewellery, lifestyle products and tableware.

How do you make a technical analysis of the Hermes share?

To carry out a good technical analysis of the Hermes share, in addition, of course, to a quality fundamental analysis of this stock, you should use several graphical indicators such as trend and volatility indicators that you can display live. Moving averages, pivot points, MACD or support and resistance levels are just a few examples.

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