Hermes International : 2019 Activity report (e-accessibility)

Activiityreport2019

Activity report 2019

Message from the Chairmen

Axel Dumas

and Henri-Louis Bauer.

2019 bears witness to the solidity of our artisanal model based on balanced development

across our métiers and regions. Though the decade has come to

an end amid intense uncertainties and a general awakening to

environmental and public health concerns, it is clear that Hermès' offering remains relevant and well-liked.

This offering is based on the simple idea of creating objects designed to last. They are the fruit of mastering tried-and- tested know-how that is passed down and enriched through the generations, crafted from exceptional materials that embrace time and are nourished by it, objects whose aesthetics are born of function.

This reality is one that we cherish and uphold. In the second half-year of 2019, we laid the foundation stone of our future

Montereau manufacture, and we are preparing to open the Guyenne workshop later this year. Our collections have been a great success with our customers

both long-standing and new, as confirmed by our results; our commitments have become more visible with the signature of the Fashion Pact; and we continue to extend and embellish our exclusive distribution network with confidence in our own future and that of our markets, which, with the recent addition of Poland, now total forty-five.

So we are right to stay confident, while remaining firmly anchored in our reality. Without deviating from our path, but adjusting to our environment, our dreams

• since this was our theme for 2019 - drive us ever onwards and contribute to
  the desirability and performance of our business model.

Axel Dumas

Executive Chairman

Émile Hermès SARL

Executive Chairman, represented by

Henri-Louis Bauer

Group overview, key figures and general trend

An entrepreneurial spirit

Creative freedom

at the core of the house's strategy

Responsible and sustainable development

Customers at the core

of an omnichannel network

2020, innovation in the making

GROUP

OVERVIEW

Group management

The Executive Management ensures the management of Hermès International.

The role of the Executive Chairman is to manage the Group and act in its general interest, within the scope

of the corporate purpose and subject to those powers expressly granted by law or by the Articles of Association to the Supervisory Board, to the Active Partner and to Shareholders' General Meetings.

The roles of the Executive Chairmen are distributed as follows: Axel Dumas

is in charge of strategy and operational management, and Émile Hermès SARL, through its Executive Management Board, is responsible for the vision and strategic areas.

The group management is comprised of the Executive Chairman and the Executive Committee, which consists of managing directors, each of whom has well-defined areas of responsibility.

Its role is to oversee the group's strategic management and its composition reflects the group's principal areas of expertise.

EXECUTIVE CHAIRMEN

Axel Dumas

Executive Chairman

Émile Hermès SARL

Executive Chairman, represented

Henri-Louis Bauer

COMITÉ EXÉCUTIF

Axel Dumas

Executive Chairman

Florian Craen

Executive Vice-President

Sales & Distribution

Charlotte David

Executive Vice-President

Communication

Pierre-Alexis Dumas

Artistic Executive Vice-President

Olivier Fournier

Executive Vice-President

Governance and Organisational

Development

Catherine Fulconis

Executive Vice-President Leather Goods-Saddlery and petit h

Wilfried Guerrand

Executive Vice-President

IT Systems and Data

Éric du Halgouët

Executive Vice-President Finance

Guillaume de Seynes ExecutiveVice-PresidentManufacturing Division & Equity Investments

The Executive Committee in the Hermès store on Avenue George-V in Paris.

Left to right: Éric du Halgouët, Catherine Fulconis, Wilfried Guerrand, Axel Dumas, Olivier Fournier, Charlotte David, Guillaume de Seynes, Pierre-Alexis Dumas, Florian Craen.

Management bodies

SUPERVISORY BOARD	CAG-CSR COMMITTEE
Éric de Seynes	Dominique Senequier
Chairman	Chairwoman
Monique Cohen	Estelle Brachlianoff
Vice-Chairwoman	Matthieu Dumas
Dominique Senequier
Vice-Chairwoman	ACTIVE PARTNER
Dorothée Altmayer
Charles-Éric Bauer	Émile Hermès SARL
Estelle Brachlianoff	Active Partner, represented by
Pureza Cardoso 1	its Executive Management Board:
Matthieu Dumas	Henri-Louis Bauer
Blaise Guerrand
Executive Chairman
Julie Guerrand
Frédéric Dumas
Olympia Guerrand
Rémy Kroll 1	Vice-Chairman
Renaud Momméja	Pascale Mussard
Alexandre Viros	Vice-Chairwoman
	Sandrine Brekke
AUDIT AND RISK COMMITTEE	Capucine Bruet
Éric de Seynes, chairman	Alice Charbin
of the Supervisory Board.
Édouard Guerrand
Monique Cohen
Chairwoman	Laurent E. Momméja
Charles-Éric Bauer	Jean-Baptiste Puech
Guillaume de Seynes
Estelle Brachlianoff
Renaud Momméja
Alexandre Viros	1 Employee representative

Hermès International -Simplified organisation chart

		HERMÈS BRAND
Retail distribution	Production	Production	Bespoke design
Argentina	Japan	and wholesale	Leather Goods	Hermès Horizons
distribution
Australia	Malaysia		division	petit h
Belgium	Mexico	Perfumes division	Tanning and
Brazil	Poland	Watchmaking	Precious Leathers
Canada	Portugal	division	division
China,	Principality	Home division	Textiles division
Hong Kong,	of Monaco
Taiwan	Russia		OTHER BRANDS
Czech Republic	Singapore
Denmark	South Korea
France	Spain
Germany	Switzerland	John Lobb Bootmaker	Furnishing fabrics:
Greece	Thailand	Cristallerie Saint-Louis	Verel de Belval
Guam	Turkey		Puiforcat	Bucol
India	United Kingdom		Shang Xia	Créations Métaphores
Italy	USA			Le Crin

Key figures

Key consolidated data in €m

		2019	2018restated*	2017	2016	2015
REVENUE		6,883	5,966	5,549	5,202	4,841
Growth at current exchange rates vs n-1	15.4%	7.5%	6.7%	7.5%	17.5%
Growth at constant exchange rates vs n-11	12.4%	10.4%	8.6%	7.4%	8.1%
RECURRING OPERATING	INCOME2	2,339	2,075	1,922	1,697	1,541
in % of revenue	34.0%	34.8%	34.6%	32.6%	31.8%
OPERATING INCOME		2,339	2,128	1,922	1,697	1,541
in % of revenue	34.0%	35,7%	34.6%	32.6%	31.8%
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT	1,528	1,405	1,221	1,100	973
in % of revenue	22.2%	23.6%	22.0%	21.2%	20.1%
OPERATING CASH FLOWS	2,063	1,863	1,580	1,427	1,217
ADJUSTED FREE CASH	FLOW3	1,406	1,447	1,340	1,212	933
OPERATING INVESTMENTS	478	312	265	262	252
EQUITY ATTRIBUTABLE	TO OWNERS OF THE PARENT	6,568	5,470	5,039	4,383	3,742
NET CASH POSITION	IFRS	4,372	3,465	2,912	2,320	1,571
RESTATED NET CASH	POSITION4	4,562	3,615	3,050	2,345	1,614
WORKFORCE (NUMBER	OF EMPLOYEES)	15,417	14,284	13,483	12,834	12,244

1. Growth at constant exchange	2. Current operating income is	It excludes non-recurring items
rates is calculated by applying, for	one of the main performance	with a material impact that
each currency, the average	indicators monitored	could aff ect the understanding
exchange rates of the previous	by the Group's Executive	of the Group's economic
period to the revenue for the	Management.	performance.
period.

3. Adjusted free cash fl ow corresponds to cash fl ows relating to the business, less operating investments and the repayment of lease liabilities recognised in accordance with IFRS 16 (consolidated statement of cash fl ows).

4. Restated net cash includes investments that do not meet IFRS cash equivalent criteria as a result of their original maturity of more than 3 months.

* Including the impact of IFRS 16 on leases. In accordance with IAS8, Hermès has applied this new standard retrospectively and restated the fi nancial statements for the period ending 31 December 2018.

	Consolidated revenue in €m			Recurring operating income in €m
2,401	2,841	3,484	3,755	4,119	4,841	5,202	5,549	5,966	6,883	668	885	1,119	1,218	1,299	1,541	1,697	1,922	2,075	2,339

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019	2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019*
	* Including the impact of IFRS 16 on leases.

Operating investments

and adjusted free cash flow in €m

933	1,212	1,340	1,447	1,406
252	262	265	312	478
2015	2016	2017	2018	2019
	Investments		A

Evolution of the group's total workforce

over the last ten years

8,366

9,081

10,118

11,037

11,718

12,244

12,834

13,483

14,284

15,417

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Female-Male

ratio

Male 32%

Number of exclusive

retail stores

307	307	304	310	311
97	97	92	91	88

210

210

212

219

223

2015	2016	2017	2018	2019
	Branches		Concessionaires

Workforce geographical

distribution

Other regions 27%

France 62%

Europe (excl. France) 11%

Workforce breakdown

by sector

Support functions 16%

Sales 38%

Female 68%

Production

46%

Revenue by métier and change 2019/2018

		2019	Change
		at constant
		revenue in €m	exchange rates
LEATHER GOODS-SADDLERY	3,414	11.3%
READY-TO-WEAR AND ACCESSORIES	1,574	17.1%
SILK	AND TEXTILES	592	7.5%
OTHER HERMÈS MÉTIERS	525	20.4%
PERFUMES	326	4.1%
WATCHMAKING	193	11.6%
OTHER PRODUCTS	258	7.0%
	CONSOLIDATED REVENUE	6,883	12.4%

Revenue by region and change 2019/2018

		2019	Change
		at constant
		revenue in €m	exchange rates
EUROPE	2,069	8.1%
France	867	8.1%
Europe (excl. France)	1,202	8.1%
ASIA	-PACIFIC	3,454	15.3%
Japan	864	8.2%
Asia-Pacifi c (excl. Japan)	2,590	17.8%
AMERICAS	1,241	12.0%
OTHERS	120	10.9%
	CONSOLIDATED REVENUE	6,883	12.4%

Revenue breakdown		Revenue breakdown
by métier 2019 [2018] in %	by region 2019 [2018] in %
Ready-to-wear and			Japan 13% [13%]
Accessories 23% [22%]
		Americas		Asia-Pacific
		18% [18%]
Silk and Textiles	Leather Goods-			(excl. Japan)
Saddlery			38% [36%]
9% [9%]	50% [50%]
Other Métiers
7% [7%]
Perfumes 5% [5%]		France 13% [13%]
Watchmaking 3% [3%]	Other products 3% [4%]		Other 1% [1%]	Europe (excl. France)
			17% [19%]

Key stock market data

		2019	2018	2017
NUMBER OF SHARES AS AT 31 DECEMBER	105,569,412	105,569,412	105,569,412
AVERAGE NUMBER OF SHARES (EXCLUDING TREASURY SHARES)	104,233,233	104,227,077	104,435,755
MARKET CAPITALISATION AS AT 31 DECEMBER	€70.33bn	€51.18bn	€47.11bn
EARNINGS PER SHARE (EXCLUDING TREASURY SHARES)	€14.66	€13.48	€11.70
DIVIDEND PER SHARE	€4.551	€4.55	€9.10	2
AVERAGE DAILY VOLUME (EURONEXT)	54,467	72,725	62,593
12-	MONTH HIGH SHARE PRICE	€689.60	€614.60	€468.30
12-	MONTH LOW SHARE PRICE	€462.20	€417.90	€386.30
12-	MONTH AVERAGE SHARE PRICE	€607.44	€509.85	€433.02
SHARE PRICE AS AT 31 DECEMBER	€666.20	€484.80	€446.25

1. Subject to approval by the Ordinary General Meeting of 24 April 2020. An interim dividend of €1.50 was paid on 5 March 2020.

2. Corresponds to an ordinary dividend of €4.10 and an extraordinary dividend of €5.

Hermès share price history in 2019 in euros

750

650

550

450

350

JAN.

FEB. MARCH

APRIL MAY

JUNE

JULY

AUG. SEPT.

OCT.

NOV.

DEC.

Shareholding structure at 31 December 2019

Public 32.0%

Hermès family-owned group 66.7%

Treasury stock 1.3%

General trend

Exceptional growth in sales and results in 2019

The store in Vancouver, Canada.

REVENUE INCREASED BY 15% AT CURRENT EXCHANGE RATES AND 12% AT CONSTANT EXCHANGE RATES. CURRENT OPERATING INCOME, UP 13%, REACHED €2.3 BILLION, OR 34% OF SALES.

In 2019, the group's consolidated revenue amounted to €6,883m, a rise of 15% at current exchange rates and 12% at constant exchange rates. Meanwhile, current operating income1, up 13%, amounted to €2,339m (34% of sales). Net income reached €1,528 million (22.2% of sales).

Axel Dumas, Executive Chairman

of Hermès, commented on the results in these terms: "Hermès has performed particularly well this year, thanks to balanced growth across all métiers and geographic regions. This sound dynamic is based on our artisanal model, the integration of our distribution network, and abundant creativity. These results are the fruit of the commitment and talent of the men and women of Hermès."

1. Including the impact of IFRS 16 on leases. In accordance with IAS8, Hermès has applied this new standard retrospectively and restated the financial statements for the period ending

1. December 2018.

OVER 2019, ALL REGIONS POSTED STRONG GROWTH. (at constant exchange rates unless otherwise indicated)

The particularly strong increase in revenue achieved in 2019 in the group's stores (+13%) was driven by growth

in all geographic regions. Hermès continued to improve the quality of its distribution network both through store openings and through the renovation and expansion of some twenty stores.

• Asia excluding Japan (+18%) continued its strong growth in Greater China, despite the impact of events in Hong Kong in the last quarter, as well as in South Asian countries. The stores in Qingdao in China and Hyundai in Korea were extended and reopened in December, following store openings in Xiamen in China and Phuket Floresta in Thailand earlier in the year. Hermès is continuing to develop its successfule-commerce platform, which was rolled out in October in Singapore and Malaysia.
• Japan (+8%) was up, with the end of

the year impacted by advance purchases made ahead of the VAT increase in October. The new hermes.jpplatform was inaugurated in June.

• The Americas (+12%) confirmed their strong momentum throughout the region. Aft er recent store openings in the Meatpacking and Waikiki districts of New York and Honolulu respectively, the expanded San Francisco store reopened in November, testifying to sustained growth in both the United States and other countries in the region.
• Europe excluding France (+8%) posted a solid performance, driven in particular by the United Kingdom and Italy. Hermès opened its fi rst store in Warsaw in November, marking the opening of a new market for the house in Poland. France (+8%) fared well, despite the negative impact of events at the end of the year.

ACTIVITY BY MÉTIER AT

END DECEMBER

(at constant exchange rates unless otherwise indicated)

All métiers are growing, with Ready-to- wear, Accessories and Jewellery posting excellent results.

Leather Goods and Saddlery (+11%) enjoyed sustained demand both for revisited classics and for new models, such as the Mosaïque, 24/24and Twinsbags. Production capacity is continuing to increase, with the expansion of the Manufacture de l'Allan and the launch of building work at the Guyenne and Montereau leather goods workshops, scheduled for completion in 2020.

A leather workshop will be built in Louviers by 2021, while a new site in the Ardennes, due in 2022, will become the group's 21st leather workshop, strengthening its regional anchors in France and creating social value.

The Ready-to-wear and Accessories division (+ 17%) continues its strong momentum, driven in particular by the success of the women's and men's ready-to-wear collections, fashion accessories, and shoes.

The Silk and Textiles métier (+7.5%)

is growing with collections that combine diverse materials and rich creativity not only in their designs and new formats but also in their techniques. The spring- summer and autumn-winter 2019 collections were a great success.

The growth in Perfumes (+4%) was driven in particular by the success

ofTerre d'Hermès andTwilly d'Hermès, as well as by the new fragrances

Un Jardin sur la Lagune andTwilly d'Hermès Eau poivrée. The house's entrepreneurial spirit continues to be expressed with the launch of a new métier, Hermès Beauty, in 2020.

Watchmaking (+12%) posted a strong sales performance reflecting the creativity of the collections and the selectivity of its network. The new Galop d'Hermèswomen's watch was well received, while Hermès watchmaking was awarded the Grand Prix de l'Horlogerie de Genève for the fourth time, for

itsArceau L'heure de la lune watch.

Bringing together Jewellery, Art of Living and La Table Hermès, Other Hermès Métiers (+20%) have risen sharply, with a strong increase in Jewellery, particularly high jewellery, which is exemplifi ed by the Black to Lightcollection.

STRONG EARNINGS GROWTH2IN 2019

Recurring operating income rose 13% to reach €2,339m compared to €2,075m in 2018. Current operating profitability, which is close to its all-time high, reached 34.0%, compared to 34.8% in 2018 due to the negative impact

of foreign exchange hedges.

Consolidated net income attributable to the owners of the parent was €1,528m, up 9% from €1,405m at the end

of December 2018. Adjusted for the non-recurring capital gain on the sale of the former Galleria store building in Hong Kong in 2018, net income increased by 13%.

Operating investments amounted

to €478m and adjusted free cash flow3totalled €1,406m.

After payment of the ordinary dividend (€474 million), restated net cash increased by €946 million to €4,562 million compared with €3,615 million at 31 December 2018.

During 2019, Hermès International bought back 84,757 shares for €52.4m, excluding transactions carried out under the liquidity contract.

1. Including the impact of IFRS 16 on leases. In accordance with IAS8, Hermès has applied this new standard retrospectively and restated the financial statements for the period ending 31 December 2018.
2. Adjusted free cash flow corresponds to cash flows relating to the business less operating investments and the repayment of lease liabilities recognised
   in accordance with IFRS 16 (consolidated statement of cash flows).

GROWTH IN WORKFORCE

The Hermès group continues

its recruitment drive and increased its workforce by nearly 1,100. At year-end 2019, the group employed 15,417 people, of whom 9,522 are located in France.

True to its desire and commitment to share the fruits of its growth with those who contribute to it on a daily basis, Hermès will distribute a bonus of €1,500 to all employees in recognition of 2019's good results. This follows on from

the announcement made in July 2019 of a new free share allocation plan for all employees.

OUTLOOK

In the medium term, despite world economic, geopolitical and monetary uncertainties, the group is asserting an ambitious target to increase turnover at constant exchange rates.

The start of the Covid-19 outbreak in January 2020 heightens the uncertainties in the global economy and the markets. Its consequences for society are difficult to assess at the time of writing, and will depend on the scale and geographical extent of its spread, as well as on the measures taken by the countries affected. The group remains highly vigilant and mobilised, regularly assessing the situation and adapting its responses.

With pride in its artisanal model,

in 2020 the house pays homage to the extraordinary tool of the human hand and the ingenuity that drives each

of the house's artisans. It is this alliance that characterises the innovative spirit of Hermès, its Innovation in the making.

Building on its unique business model, Hermès continues to pursue its long- term development strategy based on creativity, maintaining control over know-how, and original communication.

PROPOSED DIVIDEND

A proposal will be submitted to the General Meeting on 24 April 2020 to set the dividend at €4.55 per share. The interim dividend of €1.50 paid

on 5 March 2020 will be deducted from the dividend to be approved by the General Meeting.

An

ENTREPRENEURIAL

SPIRIT

Combining creative freedom, innovation and the preservation and transmission of exceptional know-how, Hermès' vision of entrepreneurial spirit continues to shape an independent and unique house. It is by developing its demanding artisanal model that the house is able to achieve its ambitious goals.

Six generations of craftsmen

The Hermès adventure began in 1837 when the harness-maker Thierry Hermès opened a workshop in rue Basse-du-Rempart in Paris. Gradually, generation aft er generation, the house followed

a dual thread - on the one hand the painstaking work of the craftsman in his workshop, and

on the other the active lifestyles of its customers. Carried by an enduring spirit of freedom and creativity, Hermès remains highly sensitive and attentive to the changing nature and needs of society.

In 1880, Charles-Émile Hermès, the founder's son, moved the workshops to 24 Faubourg Saint-Honoré, and set up an adjoining store. At this now-emblematic address, harnesses and saddles were made to measure. The business was already standing out for the excellence

of its creations.

AN INNOVATIVE HOUSE PASSIONATE ABOUT ITS ERA

During the interwar period, lifestyles changed and the house broke new ground under the management of Thierry's grandson, Émile Hermès. He decisively infl uenced the family firm's destiny when, while travelling in Canada, he discovered the opening and closing system of an automobile hood. In 1922 he obtained exclusive rights to this American "universal fastener" - known today as the zip - which was used extensively in the house's luggage and other designs. Under the impetus of Émile Hermès, the house opened up to other métiers, while retaining a close connection with the equestrian world, drawing on its mastery of raw materials and its artisanal culture to create its first ready-to-wear collections. In 1937, the famous silk scarf was born with the Jeu des omnibus et dames blanchesdesign, the fi rst in a long series.

Robert Dumas - one of Émile Hermès' sons-in-law, who took the helm of the house in 1951 - was

a regular visitor to the workshops and designed objects whose details (buckles, fasteners, saddle nails and anchor chains) exuded

an elegance that in no way diminished their practicality. Hermès objects stand out for

their noble materials, their mastery

of know-how, and their bold creativity, stimulated by the house's keen vision of the world. The silk métier now

invites artists to create unique designs.

A VISIONARY HOUSE

From 1978 onwards, Robert Dumas' son Jean-Louis gradually revolutionised the house, diversifying it and projecting it onto the world map. Hermès embraced new métiers founded on unique know-how, with watchmaking from 1978, along with the integration of new houses into the group - the bootmaker John Lobb in 1975, Puiforcat silversmiths in 1993, and the Saint-Louis crystalworks in 1995. Hermès has also created its own footwear, designed by Pierre Hardy, since 1990.

In 1987, for the house's 150th anniversary, Parisians were treated to a memorable firework display that launched the first theme, a tradition that has been perpetuated annually ever since to nourish all forms of creativity with a shared source of inspiration.

Jean-Louis Dumas also supported the development of Hermès around the world with the opening of numerous stores, which all ingeniously combined the identity of 24 Faubourg with local culture. Among these stores, several Maisons Hermès were inaugurated: on Madison Avenure, New York in 2000, in Ginza, Tokyo - in a building of glass bricks designed by Renzo Piano - in 2001, and in Dosan Park, Seoul, in 2006.

From 2006, Patrick Thomas decentralised the strategic organisation of the métiers and reorganised Hermès' presence across the world into geographical regions. He also ensured the transition to the sixth generation of the family.

HERMÈS TODAY

In 2005, Pierre-Alexis Dumas, son of Jean-Louis Dumas, was appointed Artistic Director. The house expanded its range of know-how, complementing its jewellery product off er with a first Haute Bijouterie collection in 2010. The following year, the home universe off ered home furnishing fabrics and wallpapers for the first time. Creativity, combining innovation and imagination, became ever more abundant within the different métiers. In 2008, Pierre-Alexis Dumas also created the Fondation d'entreprise Hermès, which supports artistic creation, supports artisanal know-how, and promotes the conservation of biodiversity.

Executive Chairman since 2013, Axel Dumas, nephew of Jean-Louis Dumas, strengthened the dynamic growth of the group with the inauguration of the fifth Maison Hermès in Shanghai in 2014. He has driven the implementation of the group's digital strategy, which culminated in the redesign of the hermes.com website in 2018. Axel Dumas has also taken Hermès into the new technological era in keeping with the expectations of customers who are becoming more and more connected. The Apple Watch Hermès, initiated in 2015, bears witness to a bold and innovative partnership with Apple. In addition, the group is stepping up

the omnichannel dynamic within its organisation.

On 18 June 2018, Hermès International entered the CAC 40 index, illustrating the remarkable industrial trajectory and stock market performance of

an independent, family-run house of artisans that distributes its objects through a dynamic network of 311 stores around the world. For over 150 years, Hermès has enriched its métiers without deviating from its strict quality standards. In this regard, the house attaches great importance to pursuing the development of its production in France, with its seventeen manufactures. Defying the trend for industrial standardisation and globalisation, Hermès stands out for its unique business model.

Hermès in key dates

The workshop of artisan saddler and harness-maker Thierry Hermès opens in the Grands Boulevards district in Paris.

Thierry Hermès receives an award at the Universal Exhibition in Paris for the excellence of his work.

Thierry Hermès' son, Charles-Émile, moves the workshops to 24 Faubourg Saint-Honoré and opens a store selling bespoke harnesses and saddles.

Creation of the Haut à courroiesbag.

Émile Hermès, son of Charles-Émile, brings the American "universal fastener", later known as the zip fastener,

to France, with exclusive rights for its development.

Creation of a golf jacket, the first ready-to-wear garment.

Creation of the first piece of jewellery, the Filet de sellebracelet.

Creation of the first silk scarf,

Jeu des omnibus et dames blanches.

TheDuc attelé, groom à l'attente design by Alfred de Dreux from the Émile Hermès collection, representing ahorse-drawncarriage, becomes the Hermès emblem.

Creation of the first tie.

Robert Dumas creates the Chaîne d'ancrebracelet.

The creation of the Eau d'Hermèsfragrance marks the founding of a new métier.

The bag created by Robert Dumas in 1930 is named the Kellyin tribute to Grace Kelly.

Presentation of the first women's ready-to-wear collection.

Launch in Germany of the publication Die Welt von Hermès.

Le Monde d'Hermèsis created two years later in France.

Jean-Louis Dumas, Robert Dumas's son, takes the reins of the house.

Creation of the La Montre Hermès watchmaking subsidiary in Bienne, Switzerland.

Jean-Louis Dumas creates the Birkinbag, named aft er the singer and actress Jane Birkin.

Creation of the first dinner service, Les Pivoines.

Hermès celebrates its 150th anniversary with a fi rework display on the Pont-Neuf bridge in Paris. Ever since, an annual theme has guided inspiration for all of the house's métiers.

Leather workshops established in Pantin.

Flotation of Hermès International on the stock exchange.

A Maison Hermès opens on Madison Avenue in New York.

A Maison Hermès opens in Ginza, Toyko. Launch of the first e-commerce website in the United States.

Patrick Thomas becomes Executive Chairman of Hermès.

A Maison Hermès opens in Dosan Park, Seoul.

Creation of the Fondation d'entreprise Hermès under the impetus of the house's artistic director Pierre-Alexis Dumas, son of Jean-Louis Dumas.

Creation of petit h.

Creation of the first haute bijouterie collection, designed by Pierre Hardy. The fi rst Saut Hermès at the Grand Palais takes place in Paris.

Axel Dumas, nephew of Jean-Louis Dumas and sixth generation family member, is appointed Executive Chairman.

A Maison Hermès opens in Shanghai.

Apple and Hermès launch the

Apple Watch Hermès.

Hermès International enters the CAC 40. Launch of the new hermes.com website in Europe and China.

A new market launches in Poland with the opening of a store in Warsaw. At 31 December, Hermès has 311 stores worldwide.

Opening of the Fitilieu leather workshop, the group's 17th manufacture in France.

The Hermès business model

2019 is remarkable for its exceptional results with 15% growth at current exchange rates and 12% at constant exchange rates, demonstrating the group's solidity. This

growth is well-balanced both across the métiers and across geographical regions.

Moreover, store traffic is particularly vibrant, with a 13% increase in sales in the group's stores.

On 18 June 2018, the house entered the benchmark index of the Paris stock exchange, reserved for the largest listed French groups. The saddler continues to follow an exemplary industrial and stock market performance trajectory.

The Pierre-Bénite site, in the Rhône, is a key asset for the Holding Textile Hermès.

Hermès workforce worldwide at 31 December 2019:

15,417, of whom 9,522 are based in France.

Hermès, an employer of exceptional craftsmen.

AN INDEPENDENT HOUSE

The house of Hermès remains committed to retaining the majority of its production in France, and to perpetuating its creative know-how.

It continues to assert the independence which, supported by a family-based shareholding structure, testifies to the house's solidity and encourages the entrepreneurial spirit that has become its business model.

In 2019, Hermès objects were almost exclusively made in France, at 43 sites in 8 of the country's

13 regions. These sites are grouped into regional clusters that give structure to Hermès' geographical presence.

The decade drew to close in a context of social and political tension, both in France and abroad. Hermès' economic model continues to produce results in all markets, due to its unique nature. This vitality drives the house forwards in keeping with its values of transmission, sustainability

and humanism. The house also remains committed to the principle of strengthening its integration in areas with strong manufacturing know-how in order to develop high-quality jobs.

A HOUSE THAT CREATES SOCIAL VALUE

Hermès demonstrates its attachment to creating social value to encourage sustainable development.

This is firstly manifested collectively, by job creation. In 2019, 1,133 people joined the community

of Hermès men and women, including 676 new employees in France.

Social value is also created at an individual level, with annual profit-sharing and incentive schemes benefi ting all staff. On 1 July 2019, employees were once again involved in the long-term corporate vision with a fifth free share plan.

Furthermore, the salaries of the 8,846 employees in France were increased by 100 euros (gross) from 1 January 2019. In accordance with the commitments made in 2018, the company paid an exceptional bonus of 1,000 euros to more than 7,000 of its employees in France. Hermès employees working abroad also received a bonus.

Hermès thus demonstrates its commitment to sharing the fruits of its growth with the men

and women who contribute every day to its excellent results through their work.

Poster for the Rouges Hermèsexhibition, the second installment of the Hermès Heritagecycle, in Bangkok, Thailand.

AN ENTREPRENEURIAL SPIRIT

AT THE HEART OF HERMÈS

Since 1837, an entrepreneurial spirit has guided Hermès in all aspects of its development. Embodying the humanist values of craftsmanship, it is demonstrated in its prolific creativity and constant capacity for innovation, combined with exceptional know-how, new manufactures and store openings, in synergy with local cultures. In 2019, the company was preparing to launch a new métier - Beauty - with its first chapter, Rouge Hermès.Beauty

is consistent with the house's values, and combines high standards, ethics and aesthetics with

a sustainable approach, using noble materials to create a refillable object.

This entrepreneurial spirit is manifested in the broad creative freedom that nourishes each métier. It is through this freedom, and the commitment of each employee, that the house's creativity is abundantly expressed, as seen in the many scarf designs produced each year and the new objects offered.

In close proximity to their customers, store directors also actively demonstrate this entrepreneurial spirit. They are free to compose the selection of objects offered in their store; this is why each of the 311 Hermès retail outlets throughout the world is a truly unique house of objects. This approach enables the specific requirements of customers in each area

to be met with a distinct purchasing experience. The offer is extended to the hermes.com online store, which is being rolled out worldwide.

This entrepreneurial spirit, which lies at the heart of the Hermès model, presides over the design of all the objects that have shaped the house's creative heritage since its origins. The Hermès Heritagecycle of exhibitions immerses the public in these fundamentals. The second instalment of this project, the Rouges Hermèsexhibition, has been presented to the public in Bangkok, Thailand, and in New Delhi, India. Combining pieces

from the Émile Hermès collection and the Hermès archives with more recent creations, the exhibition illustrates the house's attachment to this emblematic colour and the twenty or so associated shades that embellish Hermès objects, from wood to crystal, leather and silk. The third instalment of the Hermès Heritagecycle, the In Motionexhibition, visited Busan in Korea, and Singapore, before travelling to Hanoi in Vietnam, introducing visitors to the art of movement so beloved by Hermès. From relaxed strolls to stationary journeys, from the horse and carriage to the most modern of vehicles, movement has never ceased to inspire this contemporary house with a resolutely vibrant heritage.

Inspired by the year's theme, "In the pursuit of dreams",

the métiers gave full rein to their creativity, supported by the house's exceptional know-how.

CREATIVE FREEDOM

at the core of the house's strategy

Animapolisscarf 90 × 90 cm in silk twill, by Jan Bajtlik.

Hermès' life in dreams

Where do the ideas for the Hermès annual themes come from? The answer is simple. They are my dreams. This very personal intuition renews my

vision of our house every time. It stimulates my imagination and

energises me. I am not at all surprised that dreams in their own right came

to me as a theme. It is true to say that dreaming has been a more or less permanent state at Hermès since 1837

• it provides the material with which we shape our world! It would be impossible to create without listening to the silent and transgressive part of ourselves that assimilates, condenses and expresses
  our deepest aspirations and drives us to act, sometimes against our better judgement, with humour, poetry and boldness.

Pierre-Alexis Dumas

Artistic Director of Hermès

LEATHER GOODS

AND SMALL LEATHER GOODS

In 2019, the bag and luggage collections were inspired by the annual theme, showcasing materials, know-how and uses.

New identities in leather goods were guided by ingenious clasps and wearing styles.

Behind its appearance of a clutch with simple, tapered lines, the Clic-Hbag off ers enhanced silversmithing craftsmanship with a leather-sheathed metal rail that gives the bag structure. The Hermès Twinsbag is a double- faceted model composed of

two clutches to be worn together or separately. The Simonebag, inspired by the way schoolchildren used to tie their books together, can be worn in different ways by means of the belt, which serves as a shoulder or wrist strap.

Some classic models were updated in new sizes - such as a mini version of the Lindy- or with new canvases as for the Herbag.Meanwhile, the Birkinremained highly topical with several versions, including a lightweight one in felt and a more structured saddlery construction. The Birkin Shadowwas once again in the limelight, showcasing remarkable skill in moulded leather that revealed the imprint of the flap and the side straps on the front and that

of the zip pull and key holder on

the back. Lastly, a refi ned version with a touch of humour presented the façade of the Faubourg Saint-Honoré store. This Birkin Faubourgfeatures extremely precise stitching work.

Birkin Faubourg bag.

In the men's collections, some new classic and timeless bags emerged, such as the Webdobag in reporter format worn over the shoulder, and the

Kelly Dépêches,which adopts new dimensions for its comeback. For casual and sports use, a new generation of bags has been rolled out in an innovative textile developed exclusively for Hermès. Dynamo technical knit is a seamless 3D knit that updates existing models such as the Étrivière Shoulderand the Cityslide Cross.Meanwhile, the Haut à courroies Cosmosbag in Togo calfskin was sprayed with colour during the tanning process, creating a halo of light resembling an aurora borealis, making each piece unique.

For small leather goods, functionality went hand in hand with imaginative creativity to create unique formats and respond to new uses. Kellysmall leather goods were also reinterpreted with the Kelly Pocket.

These new designs were showcased in December 2019 at a colourful party in Shanghai entitled Please Check In!At this event full of surprises, guests discovered emblematic bags displayed in quirky, dreamlike settings as

they wandered through the exhibition following their dreams.

Poster for the tenth Saut Hermès at the Grand Palais in Paris.

EQUESTRIAN

This year, the house launched a new jumping saddle, the Hermès Vivace,which off ers riders an unparalleled sensation of proximity with their horse, as well as providing optimum comfort. This saddle was particularly under the spotlight at the Saut Hermès at the Grand Palais.Over three days, the world's fi nest riders came together under the glass roof of this Parisian monument. Hermès partner rider Simon Delestre and his horse Hermès Ryan won the prestigious CSI 5* certifi ed Grand Prix Hermès class for the second year running. A wonderful achievement! Combining competition, entertainment, encounters and experiences all on an equestrian theme, the tenth edition of this event drew more than 16,000 spectators.

SILK

Bali Barret

Artistic Director of the women's universe

Christophe Goineau Creative Director of men's silk

The silk scarf, with its narrative power, constitutes a choice medium for presenting the boldest interpretations of the annual theme. And in 2019, dreams were everywhere. They came to life

in a phantasmagorical city peopled with appealing animals in Animapolisby the young Polish designer Jan Bajtlik, his fi rst scarf for the house. They lay at the heart of the imaginary town, designed by the duo Octave Marsal and Théo de Gueltzl, concealed in À l'ombre des pivoines.They could also be found in the redesigned map of Paris in

Cité cavalière,created by Octave Marsal, inspired by a historic engraving and in which the Ile Saint-Louis and the Île de la Cité form the shape of a horse. Dreams also brought a twist to the classics, from the bright colours applied to the Brides de gala Shadow,to the unique knowhow of a Kyoto workshop, which transformed the Marble Silk Balade en Berlinedesign. Lastly, winter was welcomed with an array of 100% cashmere shawls, as well as, for the first time, a cashmere knit version of the Brides de galadesign on a muffler scarf.

Brides de gala Shadow scarf 90 × 90 cm in silk twill, by Hugo Grygkar.

Dreams also flourished at the heart of the men's collections. For her first scarf, young designer Maylis Vigouroux created a very detailed, dreamlike and volatile pattern with Nothing But a Dreamer,while the High Flyergiant scarf fl ew the observer over snowy mountain peaks at the controls of a helicopter conjured up by Dimitri Rybaltchenko. The Le Jardin de la Maharaniscarf designed by Annie Faivre was reinterpreted in two delicately dégradé shades, a technical achievement by the Lyon-based artisan printers. The men's collections were rounded off with scarves that focus on materials, formats and techniques.

Hermès Carré Club, devised by Bali Barret, continued to inspire dreams with a visit to Hangzhou in China, followed by the Carreau du Temple in Paris. Scarf- folding workshops, demonstrations, meetings with designers, and conferences enabled visitors to explore the rich creativity of Hermès.

To allow the men's collections to resonate with their audience, the Silk Mixevent continues its musical, silky and joyful tour to the four corners of the world. In 2019, Silk Mixvisited Dubai

in the United Arab Emirates, Melbourne in Australia, Taipei in Taiwan, Mexico City in Mexico and Milan in Italy.

Women's ready-to-wearautumn-winter 2019 runway show at the Garde républicaine in Paris.

WOMEN'S READY-TO-WEAR

Nadège Vanhée-Cybulski

Artistic Director of women's ready-to-wear

In 2019, Nadège Vanhée-Cybulski explored the various spheres of femininity. Hermès' functional women's wardrobe juxtaposed different elements drawn from the house's heritage, with the design codes of leather goods and nautical style for summer, and the feminised men's suit and equestrian inspirations for winter.

The autumn-winter collection was presented in spring 2019 at the headquarters of the Garde républicaine in Paris, a venue that resonated subtly with the pieces presented. Following the runway show, the press focused particularly on the collection's longevity, for the high quality and timeless character of its off ering. In late September,

the spring-summer 2020 collection was presented at the Paris Tennis Club.

Men's ready-to-wearautumn-winter 2019 runway show at the Mobilier national in Paris.

MEN'S READY-TO-WEAR

Véronique Nichanian

Artistic Director of the men's universe

In 2019, Véronique Nichanian concentrated on broadening her vision of men's ready-to-wear through

the pursuit of exceptional, innovative materials, attention to detail, and

the concept of the garment-object. The Hermès man, multifaceted and always on the move, demonstrates calculated informality.

There was a media consensus over the timeless elegance of this wardrobe, whose pieces are nonetheless under constant transformation, as a subtle incarnation of French luxury.

The autumn-winter collection was presented in January 2019 in the storerooms of the Mobiler national in Paris. This was also the venue for the spring-summer 2020 collection runway show in June 2019, this time taking place outdoors.

The men's universe also travelled worldwide for some celebratory events. The surprise-filledStep into the Frameevent, which took place in London

in the spring, celebrated men's designs with a runway show featuring several personalities with ties to the house,

a private concert, and a host of activities. In Korea in the autumn, visitors had

the opportunity to discover the men's

collections at the Hermès Walk the Lineevent in Seoul.

With playful scenography and interactive activities, the autumn-winter wardrobe revealed its many facets during a party that mingled dreams with reality.

THE HOME UNIVERSE

Charlotte Macaux Perelman and Alexis Fabry

Artistic Directors of the home universe

The home universe continues to develop worldwide, and is particularly appreciated for the pure forms, rich colours and beautiful materials that characterise this métier.

In 2019, inspiration for new designs was drawn from the material, and its natural qualities symbolic of traditional use. Each object represents a point of connection between designers and artisans.

The Célèbesbowls, vases and boxes, for example, combine two areas

of expertise from the other side of the world: solid mahogany turning from Indonesia, and hand lacquering from Vietnam. The Cheval cosmiqueprinted plaid, designed by Gianpaolo Pagni, brings together a graphic pattern and the texture of 100% Mongolian cashmere. The table lamps in granite (Hécate)and porcelain (Halo)stand out as lighting objects with pure lines.

The presentation of these exceptional pieces at Milan Design Week was in itself a tribute to materials, with a set design inspired by a vernacular architecture, cadenced by different- coloured stones laid out to give the space a graphic and contemporary feel. This presentation was attended by more than 56,000 people.

ACCESSORIES

Shoes

For women, Pierre Hardy approached summer with a varied and joyful collection interspersed with unusual combinations, while winter was marked by a spirit of reverie and wanderlust in a confi dent and sophisticated style. The men's summer collections featured supple, slipper-style loafers embellished with metal details for a relaxed and elegant look. For winter, Pierre Hardy opted for a chic and assertive look through strong new models with varied stylistic languages, from sandals

to boots.

Jewellery

The house's emblematic leather bracelet, the Collier de chien,celebrated its 70th anniversary in 2019 with a lighter version, the Collier de chien 24.Echoing the annual theme, a steel pendant with a sliding enamel cover off ered a little dream-holder, to be worn close to the body. Horn jewellery reached a pinnacle of technical achievement with elongated, intertwined rings that gives the earring and pendant collections a new twist. The men's collections included their first pendants, crafted in braided leather

or metal.

Sandal in suede goatskin with wedge heel in lacquered wood, spring-summer 2019 collection.

Gloves

The glove collections continue to showcase a wide range of skills. Amongst the innovations, the clever Volte facekit is composed of a pair of gloves in knit and a pair in leather so that they can be worn together or separately. In the stores, the semi-bespoke glove service continues to be very popular.

Hats

The cap inspired by the riding hat still features prominently in the collections, and is offered this year in a studded, dual-material version in silk and leather. Hats are still predominantly in straw for summer and felt for winter. There are also some exceptional pieces such as a Montecristi panama and a wide- brimmed felt hat with leather details.

Niloticus Lumièrenecklace in rose gold, brown diamonds and black stones, Black to Lightcollection.

WATCHMAKING

Christophe Delhotal

Director of Creation and Development of La Montre Hermès

Belts

The women's one-size belt collections continue to grow with the arrival of three models that take on the attributes

of several pieces of jewellery - the Kellyclasp, and that of the Collier de chienand Hermès 2002bracelets.

For men, a technical innovation was introduced in the form of the reversible band in two-tone technical webbing with chevron pattern.

These accessories are showcased with humour in Hermès on Stage,a four-partmini-series that can be viewed online.

JEWELLERY

Pierre Hardy

Creative Director of Hermès jewellery

In 2019, Hermès confirmed its remarkable high jewellery culture of artisans of light. Its high jewellery creations give prominence to form, reinterpret tradition, and reveal a unique palette of colours with rose gold, brown diamonds and black stone.

Presented in Paris, Black to Lightdesigned by Pierre Hardy is a refined collection that combines the beauty of the house's heritage forms with the nobility of black stone. "I envisaged black for its ability to expose light," he explained. Black jade and black spinels, sought aft er for their intensity, highlight the depth of the material and the purity of the forms.

Presented last year in Paris, the Enchaînements librescollection has since been revealed to the public

in Shanghai (China), Hong Kong, Tokyo (Japan), New York (United States) and Taiwan.

The Hermès watch family has been expanded with two new models, Galop d'Hermèsand Arceau L'heure de la lune,which were enthusiastically received by both the media and the public.

The Galop d'Hermèswatch, a new addition to the women's collections, is the result of a collaboration between the house and the talented American designer Ini Archibong. He drew inspiration from the harness collections to design a transformed stirrup, a contemporary hybrid with aerodynamic curves, producing a feminine and elegant watch with strong lines.

In the men's collections, Arceau L'heure de la luneprovides a new and unorthodox slant on a classic watch complication: the moon phase. Two mobile counters gravitate on a meteorite or aventurine dial, revealing mother-of- pearl moons (one for the northern hemisphere, the other for the southern) in step with an exclusive module, coupled with a Manufacture Hermès movement. This timepiece's new complication received the Grand Prix d'Horlogerie de Genève (GPHG) in November 2019 in the "calendar and astronomy" category.

These creations were presented at the Salon International de la Haute Horlogerie (SIHH) in Geneva, where Hermès asserted its unique relationship with time, as "Time, a Hermès object".

Dark Art,Apple Watch Hermès

Series 5.

THE INTERNET OF THINGS

Apple and Hermès continued their collaboration with radical designs for both watch cases and straps. There are also new dials, which show the time permanently on the Retina display, by means of the "Always-On" feature.

For Dark Art,the dial and the strap of the Apple Watch Hermès Series 5 were all in black. After creating versions in an infi nite palette of colours,

Pierre Hardy wanted to design an entirely monochrome model. He chose black, which he sees as "a secret, a mystery, which conceals and reveals cutting edge technology and emphasises the passing of time with interplays of light and shadow".

HERMÈS HORIZONS

Creating and crafting bespoke objects have been central to the story of Hermès since its origins, and today, Hermès Horizons undertakes special orders to make customers' dreams come true. This year, Hermès artisans created some remarkable and elegant outdoor sports and leisure equipment in the form

of a canoe and a fly-fishing kit. For music lovers, Hermès Horizons offers objects that are both technically sophisticated and stylish. The Jukebox,with leather sheathing and marquetry, integrated a high-performance

sound system, as did the Boombox,a portable turntable for vinyl records with a surprising vertical position.

This métier was showcased at the Hermès Bespokeexhibition in Tokyo. The aim of this project was to open up the fi eld of possibilities for Hermès customers by inviting them to imagine objects for themselves.

PETIT H

Godefroy de Virieu

Artistic Director of petit h

Drawing inspiration from materials to invent objects: this is creation in reverse, the approach taken by petit h, which provides artists and designers

with unused materials and objects from other Hermès métiers.

Petit h creates unexpected objects by means of a unique artistic perspective on exceptional materials. This unique approach extends to its original and inventive distribution system, a far cry from convention, with sales that are designed as experiences. As it does every year, petit h set out to meet its customers with two major events in Asia, which were highly acclaimed by both the public and

the media.

In the first half-year, a family of leather pandas created by Dutch artist Marjolijn Mandersloot was installed in the Chengdu store in China. Over three weeks, the store was transformed with a light-as-air structure in paper, bamboo and brick - producing light and shade effects - to present petit h's unique and ingenious objects. Visitors could also attend creative workshops.

At the end of November, the métier travelled to the garden city of Singapore. This time, petit h's joyful and unexpected creations were showcased for visitors in a landscape of organic earthen shapes, and in a second area filled with light and luxuriant vegetation. Quintessentially nomadic, petit h nonetheless has a permanent base in Paris, in the rue de Sèvres store.

Six times a year, visitors can discover objects that never fail to surprise.

Zip Dog, zips and bullcalf, a petit h creation.

Twilly d'Hermès Eau poivrée.

PERFUMES

Christine Nagel

Director of olfactory creation for Hermès Parfums

In 2019, the range of Hermès' olfactory creations was expanded with two remarkable new offerings. In the first half-year, the Parfums-Jardins collection was enhanced with Un Jardin sur

la Lagune,a fl oral and woody eau de toilette inspired by a secret Venetian garden as imagined by Christine Nagel.

In the second half-year, the Hermès girls welcomed a new fragrance: Twilly d'Hermès Eau poivrée.Christine Nagel revisited the original three ingredients of the first Twillyto complement the vivacity of today's young women. For them, she developed a peppery, sensual, and irreverent fragrance composed

of pungent pink peppercorn, heart notes of youthfully fresh rose, and elegant and bewitching patchouli.

Lastly, the Perfumes métier is evolving and preparing for the launch of Beauty, with Rouge Hermès, the opening chapter of this new know-how, in early 2020. This lipstick results from collaborative work on the object, the material, colour and gesture.

OTHER GROUP MÉTIERS

Cristallerie Saint-Louis

Glassworks founded in 1586, renamed the Verrerie Royale de Saint-Louis

in 1767, then the Cristallerie Saint-Louis, joined the group in 1995.

Puiforcat

French silversmiths established in 1915, joined the group in 1993.

John Lobb

British bootmaker established in 1829, joined the group in 1976.

Shang Xia

A brand dedicated to a contemporary art of living based on Chinese know-how, launched in 2010 by Hermès.

Creations by all of the house's métiers flow through the pages of Le Monde d'Hermès,with narratives and daydreams showcased with imaginative flair.

In September, this twice-yearly magazine revealed its new look, and a whole ecosystem has been set up around it. The content

of Le Monde d'Hermèsmagazine is now extended in the form of podcasts, with new stories

that can be listened to over and again.

Le Monde d'Hermès, autumn-winter2019 issue.

Driven by a manufacturing model, Hermès has strengthened its regional presence in France with new production sites and job creations. This strategy demonstrates

the company's commitment to virtuous development.

RESPONSIBLE

and

SUSTAINABLE DEVELOPMENT

The performance

of an artisanal model

Opening of the leather workshop in Fitilieu, in Isère.

HIGH QUALITY JOBS

At the heart of the house's model lies an emphasis on people. Through its manufacturing activity, principally based in France, the group contributes to regional development by creating long-term jobs. Looking to the future with confidence, Hermès continues

to expand its production capacity and its network of manufactures in France, with each new leather workshop providing 250 new jobs on average. The production sites are designed to be human-sized, offer a pleasant working environment, and open to their surroundings to foster high-quality connections between employees and their management.

On 17 May 2019, Hermès opened its 17th leather workshop in Fitilieu, in Isère, joining the Savoie-Dauphiné production cluster comprising the maroquinerie de Belley in Ain, and the maroquinerie Iséroise and the manufacture de haute maroquinerie in Savoie. The Ateliers

de Fitilieu have a training school on the premises and employ artisans with disabilities.

Work on the future leather workshops in Guyenne (Gironde) and Montereau (Seine-et-Marne) started this year and are scheduled to open in 2020.

Temporary workshops, open since 2018, have enabled their artisans to commence their training.

Hermès Employeur communication campaign.

Lastly, two more manufacture projects were announced this year, each

one involving the creation of 250 jobs.

A new leather workshop, in Louviers (Eure), will reinforce the Normandy leather goods-saddlery cluster. Scheduled for 2021, it will be a low energy building,

in compliance with the company's CSR standards. In 2022, the 21st Hermès Maroquinerie-Sellerie production site will open in the Tournes-Cliron area in the Ardennes. The buildings will blend in with landscape and will also meet the group's sustainable development criteria. These new sites

all adhere to the house's local integration strategy for its leather workshops, all of which are located in France.

More than 1,100 jobs were thus created in 2019, taking the group's total number of employees to 15,417 at

31 December 2019. When recruiting, the company is attentive to diversity and to professional parity. With

this in mind, on 15 October 2019 the house launched an institutional communication

campaign to highlight its status as a responsible business and job creator. With national reach

- in the press as well as online - and with a particular focus on developing areas, this campaign for the Hermès Employeur brand will continue in 2020 to support

the house's future recruitment across all categories of staff.

Each new leather workshop creates an average of 250 jobs.

The training hub in the new leather workshop in Isère.

TRAINING AND TRANSMISSION

OF KNOW-HOW

Attentive to the continuous improvement

of its artisans' exceptional know-how, the house is involved at an early stage to guarantee continuity for its métiers and excellence in its artisan skills.

Nearly 5,200 artisans in France pass on often exclusive techniques and know-how to future generations. This year, Hermès opened Les Ateliers de Fitilieu, a training hub in its new leather workshop in Isère, teaching skills for professions in saddlery- leather goods, cutting and mechanics. This school will ultimately accommodate around a hundred craft smen and women, including artisan-instructors who have learned sign language in order to adapt training and production for people with a range

of disabilities. In this regard, the group has made commitments to social inclusion and to keeping disabled workers in employment, in the same vein as the partnerships entered into over the last decade by the Leather Goods Division with adapted companies (EAs) and social enterprises (ESATs).

In 2019, disabled workers thus represented over 7% of the group's total workforce.

In order to share the realities of its know-how with as wide an audience as possible, Hermès at Workfestival continued its highly successful grand tour, from Rome in Italy to Stuttgart in Germany, followed by Xi'an and Xiamen in China. Through the gestures of the artisans who work in front of visitors, Hermès demonstrates the fundamentals of its artisanal approach: ensuring the continuity of unique know-how, the nobility of the materials used, and the durability of the objects created. Since 2011, more than 750,000 people in 23 countries have attended this travelling exhibition of the house's know-how.

REGENERATING REGIONS

As a socially responsible company, Hermès contributes to signifi cantly regenerating the regions in which it opens production sites. Through its projects, the house works with local authorities to contribute to local socio-economic development in terms of access to housing, public transport, schooling, and medical care. This dynamic makes it possible to provide staff with comfortable working conditions combining proximity with stable employment.

Hermès also assists in the development of other artisan stakeholders, partners and the group's brands. Its participation in regional community life also contributes to preserving know-how that has become rare and fragile. Through its integrated production model, Hermès carries out 61% of the manufacture of its objects in its own, exclusive workshops.

The new leather workshop in Fitilieu

illustrates the importance of the local integration of Hermès manufactures.

Production sites in France

				BOGNY-SUR-MEUSE
				leather goods
LOUVIERS			PARIS
LE VAUDREUIL/VAL-DE-REUIL	John Lobb shoes
perfumes	BOBIGNY
leather goods	FG SAINT-ANTOINE
	logistics	leather goods		SAINT-LOUIS-LÈS-BITCHE
			FG SAINT HONORÉ
				crystal
			leather goods-saddlery		ALLENJOIE
VIVOIN
		PANTIN			leather goods
tannery	MONTEREAU	Puiforcat silversmiths	HÉRICOURT
	tannery		leather goods
			leather goods
	leather goods
CHALLES
textiles
						SELONCOURT
						leather goods
SAINT-JUNIEN			PIERRE-BÉNITE
gloves		SAYAT		textiles
leather goods		leather goods
MONTBRON		leather goods
leather goods				IRIGNY	BELLEY
				textiles	leather goods
SAINT-JUST-LE-MARTEL	BUSSIÈRES	FITILIEU	AIX-LES-BAINS
LES ABRETS
porcelain, enamel	textiles		leather goods
NONTRON				leather goods
textiles
porcelain, enamel				ANNONAY	LE GRAND-LEMPS
leather goods
	LE PUY-EN-VELAY	tannerie
		textiles
		tannerie
AMBARÈS-ET-LAGRAVE
				BOURGOIN-JALLIEU
leather goods					textiles

Economic development embodying values

PROTECTING THE ENVIRONMENT

Hermès systematically seeks long-term and ambitious solutions to better preserve the environment. The sustainability of the group's activities relies on the availability of high-quality materials, most of which are renewable, and which are at the heart of the house's uniqueness. Each supply chain is subject to careful monitoring and analysis of its impacts with a view to improvement. Partnerships with international organisations (such as WWF France) make these actions even more relevant.

The vast majority of artisanal manufacturing processes are implemented in-house, mainly in France or in Europe, which ensures strict compliance with demanding environmental regulations.

Each métier takes action to control its footprint, such as for its water

or industrial energy consumption, which has been signifi cantly uncoupled from growth in activity over the last ten years (activity x 3.6, energy x 1.3 and water x 1.9). The group's carbon footprint figures rank it among the lowest emitters, in both absolute and relative terms, of the CAC 40 index companies. In addition, Hermès offsets its carbon emissions from all its industrial sites, offices, logistics centres and stores (Scopes 1&2) through a partnership initiated in 2012 with the Livelihoods fund, which contributes

to the reforestation of fragile natural areas and the development of local communities.

The artisanal and empowering manufacturing model has inherent characteristics of restraint that can help meet the challenges of future transitions. Not only does it have a small footprint, but it also creates objects for the long term that are durable, passed down and repaired. More than 100,000 repair requests are processed each year, illustrating the words of Robert Dumas: "Luxury is what can be repaired."

In addition, the house's distribution management, which is based on the purchasing freedom of store directors, makes it possible to produce accurate quantities, limit stocks and reduce the number of unsold items.

Furthermore, the house as a whole takes action in support of preserving our planet, as demonstrated by its ambitious commitments. In August 2019, the house signed the Fashion Pact, which was presented to the heads of state who attended the G7 summit in Biarritz. This pact is based on action in three main areas: halting climate change, restoring biodiversity and protecting the oceans.

Among the specific commitments announced is the goal of net zero greenhouse gas emissions by 2050, greater use of renewable energy, and the elimination of single-use plastics by 2030.

Lastly, as one of the 99 French companies that met on 29 August 2019 for the Rencontre des Entrepreneurs de France, Hermès shared its desire to reduce its greenhouse gas emissions by signing the French Climate Pledge. For Hermès, this objective will be met in the following ways: integrating

a "climate" criterion into the variable remuneration of Hermès International's executive chairmen, increasing

the proportion of renewable energies, improving the energy performance of the house's sites, and uncoupling business growth from energy consumption.

From 2019, 10% of the variable remuneration of the two executive chairmen is subject to CSR (corporate social responsibility) criteria, reflecting the group's commitment to sustainable development.

By signing the Fashion Pact, Hermès undertakes to halt climate change, restore biodiversity and protect the oceans.

SUPPORTING STAKEHOLDERS

Hermès is committed to its suppliers and to the regions or communities

in which they operate, and addresses all its quality, ethical, social, economic and environmental challenges. Hermès ensures that its entire value chain is involved in the key sustainable development issues. The quality and longevity of supplier relationships

(19 years on average for the main partners) contribute to the robustness of the system.

As a corporate citizen, Hermès works alongside communities in the regions in which it operates and participates

in local initiatives in various forms.

Hermès' sites in Pantin and Bobigny in Seine-Saint-Denis represent a total surface area of 100,000 m2and accommodate 2,000 employees, of whom 400 live in the department.

The Fondation d'entreprise Hermès supports the Atelier Paysan, where fleets of agricultural machinery are converted to the quick hitch triangle system.

As one of the major employers in Seine- Saint-Denis, Hermès is also involved in promoting talent in the region. Committed to diversity and professional equality, the house has also joined the Réseau Entreprendre 2003 association, and participates in providing financial support and coaching for projects with a strong potential for creating jobs. Over the years, the scope of this support has broadened: today, a dozen Hermès employees share their expertise in communication, logistics and other fields with new businesses through a skills sponsorship programme.

Group partners and brands: Textiles, tanning and precious leathers activity, Faubourg Italia, J3L, Perrin & Fils, Vaucher Manufacture Fleurier, Bettina, Maison Pierre Hardy.

The house's many commitments are the subject of a series of films directed

by Frédéric Laffont entitled Footprints Across the World.In 2019, two new episodes were added to this collection. The first, filmed in Saint-Ouen, paints a portrait of the artisans who pass on their know-how to children as part of the Manufacto programme implemented in schools by the Fondation d'entreprise Hermès. The second, made in Hong Kong, features operations in of one of the house's fifteen repair workshops.

A selection of fi lms from this collection was shown in France (Marseille, Lille and Bordeaux) and around the world (Nashville, New York, Copenhagen, Milan and Stuttgart), and broadcast on Chinese television by a Shanghai documentary channel.

Hermès' commitments have been recognised on several occasions by independent bodies - dedicated rating agencies and ESG rankings - as part of their 2019 assessments (Sustainalytics: rating 72/100, "Outperformer" category; CDP Climat, eau et forêts: rating B; Global Compact: "Advanced" level; Institut de l'économie positive: rating B+, positivity index: 75.6 %).

THE FONDATION D'ENTREPRISE HERMÈS

In 2019, the Fondation d'entreprise Hermès sought a closer connection to the men and women who work in the fi eld. Among the nine programmes supporting creation or promoting know-how, some have been expanded, such as the initiative to preserve biodiversity and ecosystems. In addition to renewing its aid to WWF France, the foundation now supports the Atelier Paysan, which assists operators in

the agroecology sector in developing environmentally friendly tools, and Vigie-Nature École, an initiative run by the Muséum national d'Histoire naturelle, which combines information gathering for researchers with raising young people's awareness of the fragility of living species. The same focus

on pragmatism and performance has led the foundation to launch a bursary scheme as part of the Artistes dans

la Citéprogramme, enabling students enrolled in dance or drama courses at higher education level to continue their studies with improved living conditions.

To find out more: fondationdentreprisehermes.org

CUSTOMERS

at the

CORE

of an omnichannel network

Hermès customers are a true community that transcends borders. For this loyal and ever-increasing audience, the house has created veritable "houses of objects", both online and in its international network of stores. Each with its own distinct offering, they provide visitors with a unique experience.

The store in Vancouver, Canada.

HOUSES OF OBJECTS ONLINE…

Hermès continues to strengthen its online presence: aft er Canada, the United States and China, in June the house launched the new version of the hermes.com platform in Japan. The special services now available to customers from the archipelago include order tracking via a customer account, a Web-to-shop service, choice of time slot for home delivery, and access to news from the Maison Hermès in Ginza and its archives. Furthermore, since October the house is open to online orders from Singapore and Malaysia.

Present in 25 countries, e-commerce has grown steadily, with 75% of traffic via smartphones. This digital offer thus represents strong growth potential. Due to their ease of use, these platforms ensure strategic consistency between their commercial purpose and their power of communication. Rich in content, they offer internet users an intense community-based experience, nourished by the house's stories and heritage as well as by the events that add colour to the day-to-day life of Hermès.

… AND WORLDWIDE

Hermès continues to reach out to its customers through new stores worldwide. Each one marks the start of a new story, since every store is a unique "house of objects" due to the purchasing freedom enjoyed by its director, and to the attention paid to window displays, which are diff erent from one location to another. Whether they are the work of artists, such as in Tokyo, Shanghai, Hong Kong and Singapore, or they are dramatically revealed like in Barcelona, New York Madison, Beverly Hills, São Paulo Iguatemi, Sydney, Melbourne, and Paris George-V, the window displays off er a fabulous immersion in the world of Hermès even from outside in the street.

In 2019, Hermès fi rmly consolidated its presence on the American continent with a number of signifi cant openings and reopenings. In the United States, 36 stores enable the house to maintain

a strong connection with American customers, and bear witness to the house's continued confidence in this market. Firstly, a new store was opened

in the heart of New York's Meatpacking district. This vast, listed building features a distinctive light-coloured brick façade and restored wrought ironwork. Florida now has a third Hermès address with a store in the Mall at Millenia in Orlando.

On the West Coast, Hermès celebrated its dynamic growth in California with the reopening of the San Francisco store on Grant Avenue, in

the magnifi cent listed building that has been its home since 2003. Lastly, the house reopened its Waikiki store in Honolulu, Hawaii.

In Vancouver, Canada, Hermès opened a new store with a very contemporary style just a stone's throw from its previous address, while in Mexico City, the house has transformed the Masaryk store, which was its fi rst location in Mexico.

In Asia, Hermès continues to have confidence in the region's various markets. The Chinese network now has 26 addresses aft er the opening of the Xiamen store. The house reopened its store

in the Hisense Plaza shopping centre in Qingdao.

Three stores reopened in Japan, in the Iwataya shopping centre in Fukuoka, in the Sogo shopping centre in Chiba, and in the Nihombashi district of Tokyo. Hermès know-how was also made available to customers in Thailand with a new store in Phuket, in the Central Phuket Floresta shopping centre, and the reopening of the Siam Paragon store in Bangkok. Lastly, Hermès reopened its renovated store located in the Hyundai Apgujeong shopping centre in Seoul.

In Europe, a whole new chapter began in Poland with the opening of a store in Warsaw, the first in the country, thereby strengthening the house's presence in Central Europe. This store will enable Hermès' loyal Polish customers and new visitors alike to discover the house's know-how and creations in a neoclassical building in the centre of the Polish capital.

The Stuttgart store has moved into a Bauhaus-style building, bringing the total number of stores in Germany to 16. In the Netherlands, the Amsterdam store has reopened a stone's throw from its previous address; it now features a remarkable brick and sparkling glass façade. Finally, the stores in Prague in the Czech Republic, Stoleshnikov Lane in Moscow, Russia, in Marbella, Spain and Montpellier, France, also reopened this year.

The store in Warsaw, Poland.

The store in the Meatpacking district of New York, USA.

THE HERMÈS COMMUNITY

This international network of stores is accompanied by innovative services, the aim of which is to provide ever-better support to the Hermès community of customers. Welcoming visitors and inspiring dreams: this encapsulates the spirit that permeates Hermès stores and the hermes.com website.

A vibrant place of encounters and experiences, each store is designed to take an omnichannel approach, and the company is accelerating

this dynamic to keep in step with the development of new technologies. Two new omnichannel services have thus been launched to improve the customer purchasing experience. The product locatorallows them to locate the stores which stock an object seen on the website. The eReservationservice then enables them to reserve a product available in a store.

The house supplements these experiences with special occasions that help to strengthen the bonds that unite the Hermès community. In 2019,

the "In the pursuit of dreams" theme was naturally conducive to events full of surprises. The Hermès communities in Dubai and Geneva enjoyed

"An extravagant dream" for an evening, while loyal customers in Taiwan were invited to attend

a "dinner in the clouds". In Kuala Lumpur, Miami and the store on avenue George-V in Paris, guests were offered the experience of a multi-sensory dinner designed around beeswax. In September, the Faubourg Saint-Honoré store welcomed customers, journalists, infl uencers and friends for the traditional Back-to-Work party devoted

to the annual theme, offering a fresh opportunity to share Hermès' dreams.

2020,

INNOVATION

in the

MAKING

2020 will be driven by "Innovation in the making", inspired by creativity and exceptional craftsmanship. This theme, which has nourished the story of Hermès since 1837, demonstrates

the house's ability to constantly reinterpret itself. In February in

New York, it was central to the Heurêkaevent, which celebrated Hermès creations with some entertaining and artistic experiences.

On 5 February, Hermès presented Beauty, the house's sixteenth métier, which combines quality, durability and aesthetics. Rouge Hermèslipstick is the first chapter in this new adventure. Other creations will illustrate the 2020 theme,

Rouge Hermès is the first chapter

of the house's sixteenth métier, Beauty.

such as double-sided scarves, a major technical innovation that allows a different expression of the same design to

be produced on each side of the scarf. In accessories, the Sunsetcuff bracelets in anodised aluminium present deep, luminous colours by means of a unique technical process. In 2020 Hermès will continue to develop its stores worldwide as well as online. A new Maison Hermès will open in Sydney, Australia, alongside the reopening of a number of renovated stores such as in rue de Sèvres, Paris. On the internet, e-commerce platforms will be launched in Hong Kong, Macao and Korea during the first half-year.

The impacts of the Covid-19 outbreak, whose magnitude, duration and geographic scope are evolving daily, are difficult to assess at the time of writing. Hermès' artisanal model, which is mainly based in France, its balanced distribution network and its local clientele all contribute to the house's resilience.

The group remains highly vigilant and mobilised, regularly assessing the situation and adapting its responses. The priority is the safety of all employees and their relatives within the framework of measures taken by the relevant medical and public authorities. On the date of publication of this activity report and on the basis that this outbreak and the disruption it causes will not exceed a few months in duration, we are confident

in our ability to mobilise all employees and reconnect with our customers.

CREDITS

Illustrations

Jochen Gerner

Photography

Page 2: Valérie Archeno

Page 8: Olivier Metzger

Page 9: Quentin Bertoux

Pages 14, 44: Trevor Brady

Page 22: DR

Pages 22, 37: Alfredo Piola

Pages 23: Cheeri

Pages 26, 29, 32: Studio des fleurs

Page 28, 30: Tim Elkaïm

Page 28: Agence Pilote

Page 29, 30: Jean-François José

Page 31: Maud Rémy-Lonvis

Page 32: Studio Rouchon

Page 33: Liz Collins

Page 33: Thomas Persson

Page 36: Benoît Le Rumeur

Page 37: Spassky Fischer

Page 38: Benoît Teillet

Page 41: Moiras © Xavier Remongin/ Ministère de l'Agriculture et de l'Alimentation

Page 41: DR

Page 45: Franck Oudeman

Page 45: Przemysław Nieciecki

Page 46: Jack Davison

Printed in France on FSC Mix

certifi ed Shade Air and Divina papers by Frazier Paris (an FSC/PEFC, Imprim'Vert and Imprim'Luxe certified company).

An Hermès publication © Hermès, Paris 2020

Hermès International Partnership limited by shares

with share capital of €53,840,400.12, Commercial and Company Register of Paris no. 572 076 396 Headquarters:

24, rue du Faubourg Saint-Honoré, 75008 Paris, France

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