Hermès // 2021 Universal Registration Document

RISK FACTORS AND MANAGEMENT RISK FACTORS

MAJOR EXTERNAL CRISIS ●

4.1.1.4

DESCRIPTION OF THE RISK s

POTENTIAL IMPACTS ON THE GROUP s

The Group is exposed to economic, political, social and health developments in the many countries in which it operates.

Geopolitical, economic or social tensions as well as a pandemic situation could have an impact on sales. The consequences would be even more unfavourable in areas where the Group has a significant presence, particularly in Asia. The breakdown of the Group’s revenue by geographical area is presented in chapter 1 "Presentation of the Group and its results", § 1.7.

IMPACT PROBABILITY

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, while its distribution is well balanced geographically. The Group operates 303 points of sale under the Hermès banner, including 221 branches that generate over 91% of revenue. In addition, the Group is continuing to develop its online sales activity with the successive deployment of e-commerce platforms in its distribution subsidiaries. Some Hermès products are also distributed via a network of multi-brand points of sale carefully selected on the basis of qualitative and/or quantitative criteria. This distribution method concerns in particular perfumes, watches and certain products from the Home universe. Lastly, the Group also owns other brands that distribute their products directly or through their own selective network. Details of these brands are described in § 1.4.1. In addition, there is little exposure of sales to seasonality. The policy of opening new points of sale is prudent and aims to spread the risks over several geographical areas. In this respect, the acceleration of the development of the Americas region aims in particular to reduce the weight of Asia in the Group’s sales. In addition, a crisis management system is in place to ensure business continuity. In particular, it was successfully implemented since early 2020 in the context of the Covid-19 pandemic (see § 4.3.4 Crisis management).

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2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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