Hermes weathers virus storm better than rivals

A Hermes shop at the Royal Exchange in London. The Hermes women’s fall-winter 2020-2021 ready-to-wear collection on show in Paris in February, below. (AFP)
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Updated 24 April 2020

Hermes weathers virus storm better than rivals

  • Sales in China grow by double digits after shops reopen there in March

MILAN: Hermes has weathered the global coronavirus crisis better than rivals, with a 7.7 percent decline in first-quarter comparable sales, and the Birkin handbag maker said that business was picking up strongly in China after shops reopened last month.

The fall in sales compares with declines of 15 percent or more reported by other luxury goods groups including LVMH, Kering and Moncler.

The coronavirus crisis first hit China — a major market for luxury goods — late last year before spreading around the world, leading to lockdowns across Europe, including Italy and France, as well as the US.

Hermes Chief Executive Axel Dumas told reporters that the second quarter would be hit hard by the health emergency given that 75 percent of the group’s stores are still shut.

However, he said that since shops in China had gradually reopened in March, sales there had grown by double-digits from a year earlier.

“The trend is very high since we reopened, probably higher given that no travel is allowed,” he said.

Dumas said that the relatively resilient performance in the first quarter was partly due to an “incredible January” thanks to the Chinese New Year.

“The Chinese New Year counts almost as a double month,” he said.

He added that until the group was forced to shut its production sites — almost all of them in France — in mid-March, it did not have any supply- chain issues, unlike some rivals.

Hermes closed all but one of its 42 sites in France, with a perfume factory converted to make hand sanitizing gel instead. The group has been partially resuming operations in production and logistics sites since April 14.

Hermes, traditionally regarded as particularly resistant to downturns, has long been one of the steadiest performers in the luxury goods industry, in part due to its careful management of production and stocks, which have helped to promote its aura of exclusivity.

Its coveted $10,000-plus Birkin handbags tend to generate waiting lists, and can sometimes increase in resale value, adding to their
attraction as a luxury purchase that is more immune to fashion trends and economic crises than other products.

Hermes said that consolidated revenues for the quarter came in at €1.51 billion ($1.6 billion). As a result of the crisis, the group had already said that it would trim its dividend for 2020 to €4.55 per share from €5, keeping the payout at the same level as in 2019.

The group is maintaining strategic investments, both in production capacities and the distribution network, to prepare to resume business in the best possible conditions, it said.

Apple, Google drop Fortnite from app stores over payments

Updated 14 August 2020

Apple, Google drop Fortnite from app stores over payments

  • Google said Fortnite will remain available on Android, just not through its app store
  • Apple and Google both take a 30% cut from in-app revenue purchases in games

NEW YORK: Apple and Google dropped the popular game Fortnite from their app stores after the game’s developer introduced a direct payment plan that bypasses their platforms.
Apple and Google both take a 30% cut from in-app revenue purchases in games, which has long been a sore spot with developers.
Fortnite is free, but users can pay for in game accoutrements like weapons and skins. Its developer, Epic Games, said in a blog post Thursday that it was introducing Epic Direct payments, a direct payment plan for Apple’s iOS and Google Play. Epic said the system is the same payment system it already uses to process payments on PC and Mac computers and Android phones.
Apple and Google said the service violates their guidelines.
“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services,” Apple said in statement.
Google said Fortnite will remain available on Android, just not through its app store. Android users can download the app from other app stores, although that’s generally not an option for iPhone users.
Epic Games did not immediately return a request for comment. Epic’s Fortnite Twitter account said the company would debut a new short film called “Nineteen Eighty-Fortnite,” a seeming parody of Apple’s iconic “1984” commercial that introduced the Macintosh computer. It has also filed a complaint against Apple in the US District Court in Northern California for dropping Fortnite.