Hermès (RMS)

"Remember, this is Hermès, so we do things slowly but surely."

Axel Dumas, CEO of Hermès.

Throughout its almost 200-year history, Hermès has gone from being a mostly national company to exporting 91% of its luxury objects. Spotting its bags, scarves or shoes has now become more common in Japan than in France itself. This commitment to international expansion contrasts sharply with the strategy of concentrating around 80% of its production processes in France to ensure the durability of the craftsmanship model and stand out from other luxury brands. The company’s business model is special, but its essence and attention to detail are what make it unique.

The horse-drawn carriage logo (inspired by French portrait painter Pierre-Alfred Dedreux) beautifully reflects the roots of one of today's most iconic brands. Founded in 1837 by Thierry Hermès, the main activity of what was once a small family business was wholesale saddlery (supplying saddles and other leather equipment). Thierry Hermès became famous for the quality of the finishes on his handcrafted products and began to attract the attention of some European noblemen. Taking advantage of the brand’s reputation at the time, Hermès expanded its portfolio of horse accessories and products throughout the second half of the 19th century, when the company was already under the control of Charles-Émile Hermès (Thierry's son). Its prestige was such that it was even rumored that some European coronations could have been postponed until Hermès finished the designs for the carriages commissioned for these celebrations.

Today, Hermès is one of the most profitable luxury brands in the world, with operating margins of over 40%. However, building a legacy after 6 generations hasn’t always been easy. The secret of its success is largely due to the fact that strategic decisions are made exclusively by the Hermès family, which owns 66.59% of the total shares (the second-largest shareholder owns only 1.5%), and they are always a product of long-term thinking to strengthen the resilience of the company. The first great crisis that illustrates this took place at the beginning of the 20th century. The company’s legacy was put in jeopardy by the rise of the automobile and the obsolescence of the horse-drawn carriage. Émile-Maurice, the founder's grandson, knew how to spot an opportunity in the midst of uncertainty and opted to expand the product portfolio to reach other fields, such as fashion and sports, and focus on retail. In 1918, Hermès presented its first golf jacket made of leather to the then Prince of Wales. In 1922, the company presented its first handbags and in 1925 its first travel bags. Silk ties and Eau d'Hermès perfumes wouldn’t arrive until 1937 and 1949, respectively, but in just 30 years, the French company had emerged stronger from its first crisis.