HERMÈS - 2020 Universal registration document

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PRESENTATION OF THE GROUP AND ITS RESULTS STRATEGY

STRATEGY

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UNIQUENESS AND PERFORMANCE OF THE CRAFTSMANSHIP MODEL

In 2020, faced with an unprecedented health and economic crisis, Hermès, faithful to its humanist values and its commitments as a responsible employer, engaged actively with the situation and demonstrated the strength and agility of its independent craftsmanship model. Faced with the acceleration of several major trends, such as the digitisation of uses, the positive dynamics of the Asian market and the major challenges of social and environmental responsibility, this model confirmes its resilience. The Hermès strategy revolves around our values: spirit of conquest, creativity, craftsmanship, quality, authenticity and independence. It is based on three pillars: freedom of creation, the high standards of craftsmanship savoir-faire and the balance of the exclusive distribution network. CREATION AT THE CORE OF HERMÈS’ STRATEGY In this singular context, creation is at the heart of the model. It is the best response to the crisis, with unique objects that last and arouse desire beyond fashions and circumstances. Hermès creates and manufactures quality objects designed to last, to be passed on from one generation to the next, to be repaired. This approach, as well as the search for excellence, particularly in materials, requires consideration of the challenges of sustainability and quality at every stage from design to sales. Hermès’ strategy is based on creative freedom, driven by its creators and Artistic Directors around the theme , which inspires the House’s creative activities. With pride in its craftsmanship model, in 2020 Hermès paid tribute to the extraordinary tool that is the human hand, as well as to the ingenuity that drives every one of the House’s craftpeople and women. For it is this combination that characterises the innovative spirit of Hermès, the Saddler's s pirit . High standards in design and manufacturing encourage the creation of objects that aim to surprise and amaze customers. This creativity, revolving around traditional savoir-faire , is coupled with innovative processes to revisit timeless models and create exceptional pieces, without departing from Hermès’ trademark humour and imaginative flair. This is true of the House’s 16 métiers as well as its other products and brands, in particular, the bootmaker John Lobb, Cristalleries Saint-Louis and the silversmith Puiforcat. The unbridled creativity flourishes in each métier , as reflected in the numerous scarf designs printed every year. It is then expressed through over 50,000 references, developed around a unique identity and a style blending exceptional quality, innovation, surprise, elegance and simplicity. In 2020, it was expressed through the successful launch of the Beauty métier , with a first collection of lipsticks. Hermès’ mission is to create unique and original objects to elegantly satisfy the needs and desires of its customers. Its goal is the pursuit of excellence, in each of its métiers and services, with craftsmanship at the heart of its model.

Hermès leverages its craftsmanship division, the second pillar of its strategy, with nearly 5,600 craftpeople and women in France. A House of over 180 years, backed by a rich history shaped by six generations of craftpeople, Hermès draws from its past through its savoir-faire , and is geared to the future through values that address the concerns of our modern societies. Hermès moves with the times, but always respecting tradition, transmission and innovation. The quest for excellence and quality, the search for precision and elegance are the values that guide its action. It is over this long period of time that the House has forged its savoir-faire and its values, and that the Hermès strategic vision has developed. The craftsmanship model is one of the pillars of Maison Hermès, and ensuring that it lasts is key to its strategy. The House thus works alongside those who master, preserve and transmit craftsmanship savoir-faire through their knowledge of materials and their exceptional techniques. Each new leather goods workshop is an architectural project in its own right and creates around 250 jobs, promoting a pleasant working environment on a human scale. Hermès continued its investments in production capacity in 2020, demonstrating the Group’s confidence in the future and in the strength of its craftsmanship model, despite the uncertainties of the crisis. The House attaches great importance to the continuous improvement of its craftpeople’s skills and savoir-faire , as evidenced through its École du cuir . The craftsmanship model is at the heart of all the métiers of Maison Hermès, drawing on exceptional materials. STRENGTH OF VERTICAL INTEGRATION To guarantee the long term excellence of this craftsmanship model, the House takes particular care to secure its supplies of materials. Vertical integration, through partnerships and acquisitions, supports the development strategy, with regards to materials as well as techniques and savoir-faire . More than 60% of production is integrated and 80% is located in France. This vertical integration is present throughout the production chain, from supply to the distribution network. Strongly anchored in France, based on the mastery and excellence of savoir-faire , a métier rather than a task, it has enabled the Group to be agile in the face of the crisis. As a result, the Group has been able to adjust its production volumes and reallocate its orders to some geographical areas in order to enable optimal inventory management. Its craftpeople have all mobilised to ensure the continuity of production and thus limit delivery disruptions.

14 2020 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL