HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP STRATEGY

AN ENTREPRENEURIAL SPIRIT AND FREEDOM OF PURCHASE Beyond its history, the right times for action and the spirit of conquest set the tempo at Hermès, drawing inspiration from the work and talent of all employees driving its corporate vision. This opportune time for action means the art of understanding one’s time and capturing the essence of it. The entrepreneurial spirit has been at the heart of Maison Hermès since its creation, never leaving its side and guiding all aspects of its development. It is illustrated by creative synergies, the capacity for continuous innovation, new métiers , such as the Beauty line launched in early 2020, the establishment of manufacturing units and new store openings. An entrepreneurial and innovative spirit underlies the creation of every object. The strategy offers store managers freedom of purchase, to meet the specific needs of their customers. Two podiums are organised every year, presenting the autumn-winter and the spring-summer collections. These bring together all store and country managers, managers of the different métiers as well as designers, to present all collections to the sales teams in all regions of the world. They are thus responsible for their own collections and make their store unique with a special mix of products. This freedom means that in each country where Hermès is present, the Group’s customers are thus presented with a diversified and unique mix of products resulting from this flurry of creativity, blending iconic products and the House’s new references, created by its designers, artists, colourists and artistic directors, to best meet local expectations and dedicated to the elegance of its customers. AN INDEPENDENT HOUSE Hermès continues to assert its independence, underpinned by a strong family-based shareholding structure committed to retaining most of its production in France and perpetuating its savoir-faire to serve creativity and its long-term vision. Hermès’s strong and sustained development is the result of sound and rigorous management, a resilient business model, and prudent financial management. They contribute to preserving the uniqueness of the House, part of the CAC 40 index since June 2018, in a context of strong growth. This is achieved by maintaining the Group’s profitability, its high cash level, its operating cash flows, targeted and qualitative investments, and the security of its assets. Financial independence ensures that its long-term strategy is safeguarded.

model, with commitment to regions where there is a high level of manufacturing savoir-faire to create quality jobs. Through its engagement with local authorities and communities where its production sites are located, Hermès contributes to revitalising regions, and provides working conditions that offer proximity and stable employment. Control and security of supply are at the heart of the strategy. Through its integrated production, Hermès can produce most of its objects in its internal and exclusive workshops. Hermès is a humanist company, deeply respectful of all those who, with their hands, commitment, savoir-faire and passion, are working to make the House a success. Hermès's craftsmanship model leaves a careful environmental footprint. In its direct sphere of influence, biodiversity in particular is systematically taken into account in the construction of its production sites, and in its indirect sphere, the Group has a positive impact on its supply chain, by preserving autonomous ecosystems and by participating in global initiatives. As regards sustainable development, Hermès is determined to leave a positive global footprint, by paying utmost attention to the performance of corporate social responsibility, in keeping with the House’s DNA and its craftsmanship model. Hermès’s objects are created, designed and made to last, using the most beautiful and robust natural materials and the best craftsmanship savoir-faire . A Hermès object acquires a beautiful patina over time and frequently improves with age. Craftsmanship of excellence means a piece that can be repaired. The House has therefore always had craftsmen dedicated to this activity, in France as well as abroad. Offering long lasting, repairable objects, which are meant to be handed down is also a way to reduce the impacts of over-consumption and the wasting of resources, one of the principles to which Maison Hermès is particularly attached. There is a strong commitment to the creation of social value, both collectively through job creation in communities, and individually through bonus share awards, profit-sharing and incentives to employees, testimony to the Group’s desire to share the fruits of its growth with those who make it happen on a daily basis. Hermès’s commitment also implies strong signals from management. For example, since 2019, 10% of the Executive Chairmen’s variable compensation is subject to CSR criteria, such as industrial energy consumption, the local integration of our sites and gender equality. Hermès’s remarkable growth is the fruit of this strategy. It is the result of the high standards of a House founded on craftsmanship and independence and driven by its exceptional savoir-faire to serve unbridled creativity. Hermès’ strategy hinges on historical savoir-faire while remaining resolutely forward-looking, through its regular transformations, creativity and innovation, and its ability to understand and anticipate the aspirations of its customers today. For Hermès, craftsmanship is a sustainable and human adventure, in a constantly changing world.

1

VIRTUOUS AND RESPONSIBLE GROWTH UNDERPINNED BY HUMANIST VALUES

The majority of Hermès’ production takes place in France, at 43 production sites grouped to create regional clusters. Hermès’s strategy is to pursue this sustainable, responsible and social value-based growth

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

19