HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP RISK FACTORS

MAJOR EXTERNAL CRISIS ●

1.11.1.4

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DESCRIPTION OF THE RISK s

RISK MANAGEMENT s

Hermès holds a unique position in the luxury market. Its broad portfolio of products reduces the risk of dependence on any particular range and its distribution is well balanced geographically. Hermès relies on a balanced distribution structure across all regions of the world that significantly reduces client risk. The Group operates 311 points of sale under the Hermès banner, including 223 branches generating over 86% of revenue. A list of stores owned by the Group can be found on page 38. Moreover, the Group is working to expand its online revenue. Certain Hermès products are also distributed through a network of multi-brand sales outlets carefully selected on the basis of qualitative and/or quantitative criteria. This is especially so of perfumes and watches, as well as some products from the Home universe. Lastly, the Group also owns other brands that distribute their products directly or through their own selective network. The details of these brands are presented on page 35. Sales are also slightly exposed to seasonal trends, with the second half of 2019 accounting for 52% of total sales (unchanged from 2018). The balance of the geographical portfolio reduces risks related to geographical areas, with results obtained throughout all the Group’s areas and a controlled investment policy. Furthermore, a crisis management system is envisaged and may be activated as needed, including business continuity planning at the local level.

The Group is present in many markets and is therefore exposed to economic, political, social and health changes in the countries in which it operates. POTENTIAL IMPACTS ON THE GROUP s Geopolitical or economic tensions or a long-term pandemic could impact the Group’s sales, particularly in areas where the Group has a significant presence. The breakdown of the Group’s revenue by geographical area is presented on page 28.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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