Hermès International Société en commandite par actions

[Interpreted] Good morning, one and all. Thank you very much for joining us for the year 2025 full year results.

We are very happy to have you here over once again at our Sevres store. After a good Q4 with a 10% growth at constant exchange rate, I'm very happy to present you the robust results for 2025.

Our 9% growth rate has allowed us to exceed the EUR 16 billion mark for our turnover and also we've improved our current operating profitability. 2025 was marked by more uncertainty, but Hermes maintained the course, kept the right balance and remain true to its value.

The solid results of this year reflect the success of our creativity. The care we put into our material know-how and vertical integration.

We continue to invest to ramp up our production capacity and to secure our supply chain. We continue to grow our distribution network across the world to support long-term growth.

In 2025, operational investments reached EUR 1.2 billion. We also created new jobs and trained our staff.

Hermes onboarded an additional 1,300 people, 60% of which in France. And true to our belief that we need to share the fruits of growth.

Hermes announced a general wage increase of EUR 120 with additional individual bonuses for all employees in French. Moreover, Hermes will be paying out a EUR 3,000 bonus to each of our 26,000 employees across the world for 2025.

Let's now talk about the highlights. Every year, the teams are inspired by the theme of the year.

In 2025, it was drawn to craft. There were many striking examples.

For example, the So Medor bag, the Seau Mousqueton, the Haut a Courroies a relier that you can see on the screen, which were all very successful. The Home department was also very successful at the Milan Fair as well as the launch of the new Tableware service Hermes [indiscernible].

Men and women's Ready-to-wear were also very well appreciated in Seoul, Hong Kong and Shanghai during the shows. And I'd like to thank Veronique Nichanian, who contributed immensely with her talent to the Men's Ready-to-wear division over the last 37 years.

It was very emotional to see her present her final collection in January 2026. Her talent, conviction and sense of fun shaped the destiny of Hermes Men's Universe with great style.

To reinforce our vertical integration, we continue to invest in our production capacity across all divisions, in 2025, we inaugurated our 24th leather workshop, L'Isle-d'Espagnac. We are going to be integrating this year a new leather workshop in Loupes and construction is underway in two other locations, Charleville-Mezieres and Colombelles, and they will be opening respectively, in 2027 and '28.

At the end of January 2026, we also announced the opening of a new leather workshop in Andelys in 2030. We have also increased and invested in the production capacity in other divisions.

For example, we have a new site which is under construction in Couzeix for Tableware, and we invested also in our watchmaking capacity. We continue to secure our supply chain with our long-standing partners and continue to grow these sectors of excellence, especially in France.

Moving on now to our exclusive and integrated distribution network. We continue with our multi-local strategy.

In the U.S., we have two new stores that were inaugurated in Scottsdale and Nashville. We have about 15 extension and renovation projects.

Among which, Florence in Italy, Knokke, Macau and Changsha. The creation of Hermes also finds it's expression in our communication.

In the second half of 2025 with Hermestories. We invited people in Milan to discover the history of Hermes through a theater play.

Hermes in the Making stopped off in Shenzhen, Istanbul and Taipei. More than 66,000 visitors met the craftspeople of Hermes and discovered our know-how.

In 2025, the eighth collection of high-end Jewellery was presented in Hong Kong, Singapore and Tokyo. So the formes de la couleur and petit h Taichung, Seoul and Vancouver.

Moving on now to our responsible CSR approach. True to its social model, the Hermes pay out EUR 328 million to its employees for 2025, including bonus, incentives and profit sharing.

Hermes also pursued its actions at aiming at strengthening inclusion and diversity. And henceforth, has 49% remain in the top 100 positions.

The strategy -- the environmental strategy has been pursued. Deployment of plans for decarbonization for all the divisions has allowed us to reduce by 69%, the emissions of Scope 1 and 2 in absolute values compared to 2018 and by 58% and intensity for Scope 3 in the same period.

We continue to draw on local know-how unemployment, namely in France. And thus, the group has created 1,300 jobs in 2025, of which 800 in France.

Over 3 years, this represents 6,200 jobs, a figure, I'm particularly proud of. We've also opened two new training schools, they call Hermes Ecole des savoir-faire, totaling a number of 12 training schools with the CAP diploma.

Environmental ambition is also embodied in the responsible development of the production capacity of Hermes with the inauguration in last September of the leather workshop of L'Isle-d'Espagnac in Charente. Developed on a rehabilitated Brownfield site, this high energy efficiency building is exemplary -- has exemplary sustainability and reasserts a local anchoring.

The environmental and social commitments of Hermes have been recognized by the main nonfinancial rating agencies, such as the confirmation of the inclusion of Hermes in the A List of CDP, placing Hermes amongst the companies deemed to be the -- have the best performance worldwide on the environmental issues, improvement of Sustainalytics rating and finally the Transparency Award, which reward the quality of the financial information in regulated information publications. Let me now come to the activity.

In 2025, Hermes achieved a remarkable performance. The revenue in 2025 exceeded EUR 16 billion, up by 9% at constant exchange rates and 5.5% at current exchange rates.

All the regions with the exception of Perfume, Beauty and Watches have recorded a solid progression. In Q4, sales amounted to EUR 4.1 billion, progressing by 10% at constant exchange rate, the same pace as the previous quarter on a high comparison basis.

All regions have had sustained growth. Europe, Japan, America and the Middle East are progressing with a double digit, while Asia, excluding Japan, has grown by 8% in the fourth quarter.

Let us look at the activity by geographical area over the year. In 2005, all geographic region recorded sustained growth.

France plus 9%. Europe plus 11%.

Flat solid progression carried by the loyalty of our local customers and the dynamic of tourism flows. Japan plus 14%, pursues its remarkable momentum, thanks to the loyalty of its local customers and its exclusive retail network.

Asia, including Japan, plus 5%, recorded beautiful performance. In all the countries of the region, all posted growth.

America, plus 12% recorded excellent year in the U.S.A. as well as the other countries of the region.

And finally, other zones, including the Middle East, mainly strong growth of 15%. The geographical breakdown of our revenue remains well balanced with a slight rise in Europe and in Japan as compared to last year.

Now let's look at the revenue per division. In 2025, Leather Goods and Saddlery plus 13%, pursued a sustained growth in line with its annual objective, carried by the strong desirability of our models and the increase of our production capacity.

Clothes and Accessories division confirmed its dynamic movement plus 6%. Silk and Textile division, plus 5% after a good Q4, progressing, thanks to the diversity of the formats and materials.

Perfume Material division, minus 8% with a lesser performance. Watches, minus 2% after a first semester, which is difficult, but good growth in the second half of the year.

Finally, other divisions of Hermes plus 11%, which includes Jewellery and the Home universe pursues their solid progression. The revenue by sector and division is quasi-stable as compared to the previous year.

I'm now going to give the floor to Eric du Halgouet, our CFO, who will present the solid results of the year.

[Interpreted] Well, thank you very much, Axel. Good morning, one and all.

The group achieved a solid performance in 2025 as in 2024. Operating income is up 7%, exceeding the pace of sales in spite of negative exchange rate effect.

Net profit restated after the exceptional contribution for French large companies is up by 5.5% and our business cash flow is up by 11%. Our revenue was in excess of EUR 16 billion in spite of negative exchange rate effects to the tune of EUR 500 million, which comes from the depreciation of the dollar-yen compared to the euro.

Our gross margin stands at 71.1% versus 70.3% in 2024. Negative currency hedge was offset mainly by the accretive conversion effect and a controlled increase of our cost as well as an improvement of our sell-through rates.

Communication expenditure reached EUR 620 million and make up 3.9% of sales. At constant exchange rate, they are stable compared to 2024, a year during which we launched the Barenia fragrance.

Sales and admin expenses include the cost of our distribution network and support functions and variable rent stand at EUR 3.1 billion and is up by 5%. The group beefed up its headcount in the stores to support growth and also invested in IT projects for the distribution network and logistics.

Other income and expenses are made up of depreciation of assets, right of use, stand at EUR 1 billion. The increase compared to 2024 is down to the speeding up of investment and to the increase in the social contribution from 20% to 30% on the free share plan, which was given out to employees in 2023.

Our recurring operating income, therefore, stands at EUR 6.6 billion and is up 7% versus 2024. On this graph, you have our high level of recurring operating profitability over the last 5 years in spite of the negative exchange rate effect.

Our recurring operating profitability is up by 0.5 percentage points and reached 41% in 2025. Net financial income is a total of EUR 207 million versus EUR 283 million in 2024.

It includes the cost of currency hedging, income on cash and reached EUR 300 million versus EUR 400 million in 2024 because of lower interest rates. Tax expenditure is impacted by this exceptional contribution on profits in France.

This additional tax of 41.2% reaches EUR 330 million. It is equivalent to a 5 percentage point increase in 2025.

Net income of associates stands at EUR 47 million and corresponds to our share of results in the Middle East by UAE. Net income group share stands at EUR 4.5 billion.

And when accounting for exceptional contribution it is up 5%, 5.5% at the same pace as revenue. Excluding exceptional contribution, net profitability stands at 30.3%, a high level, which was already achieved in 2024.

Between 2015 and 2025, our sales CAGR and our net income CAGR stand respectively at 13% and 17%, and that is in spite of negative exchange rate effects over the last 3 years. Over the last 5 years, our revenue has been multiplied by 2.5 and net income by 3.5.

Operational investments reached EUR 1.2 billion in 2025. The group sped up its investment in the distribution network and production capacity.

We devoted EUR 769 million versus EUR 611 million in '24 to securing our strategic locations to renovation and to growing our network in the U.S. with Scottsdale, Beverly Hills also in Europe with London, Geneva and also our Beijing Sanlitun projects.

EUR 226 million were devoted to reinforcing our production capacity mainly for new leather workshops in Charleville-Mezieres, Loupes and L'Isle-d'Espagnac as well as upstream in silk, hardware and the home department. And EUR 166 million were invested in real estate, digital tools and information systems.

Operating cash flow stands at EUR 5.6 billion. Restated after the exceptional contribution, it is up 10% versus 2024.

Working capital requirement variation represents as in 2024, a limited use of cash to the tune of EUR 200 million, thanks to a good management in stock both in production and distribution. Cash flow related to operating activities reached EUR 5.4 billion, is up 11%, excluding the exceptional contribution.

Once accounting for operational investment and reimbursement of rent debts, our adjusted free cash flow stands at EUR 3.9 billion. Financial investments correspond to shares bought up under our vertical integration and upstream downstream integration strategy.

EUR 2.8 billion worth of dividend were paid out. Hermes International didn't buy back any of its shares.

After taking into account the negative exchange effect, our restated net cash flow position went up by EUR 700 million and reached EUR 12.8 billion. The structure of the balance sheet remains the same as in 2024.

Our cash makes up more than 50% of assets and equity, EUR 19 billion, more than 75% of our liabilities and the solid financial structure allows us to remain independent and to execute our long-term strategy. The ordinary dividend, which will be submitted to the approval of the general assembly stands at EUR 18 per share.

That's a 39% payout excluding exceptional contribution. It will be paid out on April 23, and an interim dividend will be paid on February 18.

Thank you very much for your attention. And back to Axel to talk about the outlook.

[Interpreted] Thank you, Eric. I now come to the outlook of the group that remain unchanged.

In uncertain economic and geopolitical situation, Hermes deals with economic with confidence, thanks to a strong integrated artisanal model with well-balanced retail network and creativity of its collections and loyalty in the world. We pursue our momentum carried by the enthusiasm of our teams in the world.

We stay our course theme of the year, venturing beyond is an invitation to discover new horizons and renew its curiosity. We pursue a dynamic momentum in job creation as well our investments in production capacity, mainly in France.

This year, we will open the 25th, leather workshop of Hermes in Gironde. 2026 will be a dynamic year for our retail with several openings and enlargements such as Beijing and Geneva as well as London with the opening of the new [indiscernible] in New Bond Street.

I'd like to thank very warmly our customers all over the world for their trust and loyalty as well as all our employees, because it is their commitment and enthusiasm which makes for the shared adventure, so enriching. We are now available with Eric to answer your questions.

[Interpreted] Edouard Aubin from Morgan Stanley. I got a couple of questions.

First of all, could you go back to the beginning of the year trend? I know that there's the Chinese New Year and the timing of the Chinese New Year, which makes a situation difficult to maybe interpret.

A question to Eric now on the level of stocks, I believe that they've gone down to the tune of 20 days. Could you tell us about December 2025?

I think that you are at the bottom of the range when you look at the last 10 years. So could you tell us a bit more on that?

And is it going to be complicated for the beginning of the year. You've got a limited number of bags, for instance?

And third question, on the fact that one of your peers, Ferrari, recently are going to slow down their increase in production capacity. They've given a guidance where they're going to slash production to keep up the desirability of the brand.

You reminded us that you're going to be opening new leather workshops by 2029. Is there a debate amongst investors on the "ubiquity" of your bags?

[Interpreted] Okay. So I'm going to start off with your first question.

It's not the first time you asked questions about trends on the beginning of the year. My answer is sadly going to be the same.

The Chinese New Year has a huge impact on our trends, as you know. So it's difficult to identify any trend before that happens, and the new year in China changes every year.

Last year, it was end of January and now it's mid-February. So we won't really have a any clear idea before the end of Q1.

So I encourage you to wait for the Q1 results presented by Eric later on in the year. In any case, we had -- we were very successful with the Chinese New Year last year.

For the rest of your question, there are no significant changes. In other words, you can see U.S.

growing. Japan good figures as well.

We're quite unique at Hermes in that we don't have any countries where we've seen any drops and decreases. It's quite rare, and we hope that we can continue on that same thing.

Now you asked Eric to answer your question on the stocks. It was probably very wise.

But before he answers, I would just like to say one thing that I think is interesting at Hermes. First of all, we empower people at Hermes, and our distribution subsidiaries and especially since COVID, completely manage their own stores, their own countries.

So that's the first thing. Secondly, we are quite unique is that store managers are free to buy what they want.

Twice a year, we have 700 people who come to Pontault outside Paris, and they choose what they want to buy and put in their stores. It's quite unique.

And then there's a financial side of things, which is probably more interesting to you is that our stocks are managed in a very granular way at store level. The freedom of, yes, procurement for the stores.

Now regarding the stocks for most divisions, we are in line with our provisions and forecast. So this year was a year of normalization.

At the end of December, we were perfectly in line with our objectives, especially for leather goods, because production was good in 2025. So we ended the year with a very comfortable level of stock to prepare for 2026.

Now going back to your question on Ferrari. I'm not going to speak for them.

Of course, but Enzo Ferrari used to say that production of Ferrari is demand minus 1 car. Now there are always some tough decisions to be made.

But I can tell you that I'm very glad and proud to create jobs across all of France's regions. We are very proud of this.

We have 12 training schools to train young people but also people who decided to change course in their career. It's very important that we are able to do this, especially in a world where people can lose their job very easily.

We are there to help them find a new job and to change course. So this is why we have this important plan that runs until 2030.

But then there are two things I would like to add. Actually, three things.

if I end up only saying two is probably because I had good instincts. So the first thing that I want to say is that we have a good balance between our different divisions.

We don't sell the same as we did a few years ago. When I started at Hermes 13 years ago.

Leather was 55% and today, it's 45%. So we also have this strategy of balancing out the different divisions.

There are some divisions that grow very quickly, ready-to-wear, Jewellery, shoes, the home department. So we have this balance between the different divisions.

Secondly, I also asked the divisions to be balanced within themselves. So for example, for leather goods, we don't sell just one model.

Likewise, for shoes, we don't have one model. We kind of balance out the desirability of our collection.

So we ask our metier to renew themselves and to renew the collections. And there is this freedom to create, which is also very important, and it does sometimes lead to interesting debates between those who want to buy and those who create.

And I think this is part of our strength. We've got a very diversified product offering.

When we are pitched new ERPs or new systems, we are told there are so many different models. We're not going to be able to fit that into our IT model.

We have about 50,000 SKUs, which are active. And normally, you should be at 7,000.

We'll never be at 7,000. It's not even something that we are aiming for.

And then thirdly, we are a company, which is based around craftsmanship, making a bag is 16 hours worth of work. So our volumes are quite low.

And I'm not resting on my laurels. And as you know, I'm always quite worried about everything.

But we have across people who make [indiscernible]. It takes some time.

And our desirability protects us to some extent. And we are very demanding when it comes to materials, when it comes to know-how, and it's not always easy to find these great materials.

So yes, as long as we can strike the right balance, there will be desirability. Yes, please.

[Interpreted] Hard to find somebody more confident than myself to pass the floor, Antoine Belge, BNP Paribas. Three questions, please.

First of all, on China, Asia in general, what are the lessons learned from the end of the year. One talks of a slight improvement and not much more.

Do you share that vision? And what are the interesting things to say about China?

Secondly, traditionally in the beginning of the year, Hermes has [ passes ] the price increases [indiscernible] system to calculate average amounts. But can you tell us how much was the average increase in prices in Hermes?

And the third question, the operating margin was higher than expected. Exchange effects maybe less high this year than expected.

However, when you look at the minus 7% for the revenue in the Q4, that doesn't all go very well for the exchange rate. So what are the different sort of dynamic movements for the operating margin for 2026?

[Interpreted] I'll try and answer, and Eric, you will correct me when I say something silly. Anyway, for China.

I -- we were always an improvement in China. It's worth saying is, do you see an improvement?

Every year, we've grown. We've grown less fast, than in the past, but we grew.

What I see from my little store is the activity, recognized activity of Hermes customers that continue to come, excellent customers with value effect by expensive products and a drop in aspirational customers which are not our biggest customers. So we've always been able to grow.

I don't see the situation deteriorating. I see positive things.

When will it be a structural change and not a trend-related change? I can't predict either the exchange rate or the trend every time, but I believe that there are positive events, in particular, in the way in which digesting the real estate crisis, which is weighing on things.

So I'm not crying victory, I'm not worried. I'm proud of the teams that have always grown.

And I sometimes we don't emphasize this enough. And then is it the big turnaround?

This allows me to answer a question that you haven't asked, but which is interesting. What I believe is that we've returned to the 21st century as it was since I've been the CEO.

Every 2 years, there's a problem, September -- there's SARS in Hong Kong. I won't go through all the problems Fukushima in Japan, terrorist attacks in Paris.

So every 2 years, there's a problem in the world. And that's why we have this strategy of balance in the geographical areas.

When Japan is not doing that, well, the others offset. When Japan is doing better and -- so we have the strategy that has really served us.

Now where the strategy found its limits was during the COVID? COVID it was all over the world.

This figure that we shared with Eric, because we were the only ones in the office, during this period to decide what to do. We decided to keep everybody not take the state aid and continue to pay them.

And we did our employees. 82% of our stores that were closed, it was not one zone making up for the other.

What happened afterwards? All the zones, all the geographical areas function where we double the sales in a year's time.

So now we're coming to something normal one. Problem in one area is offset by one, which is doing better.

So this idea of resilience and the balance of the divisions of the metiers that we've spoken about geographical zone, balance between the geographical zones. I think China will be the back and then we don't know which problem will pop up in the years to come, but that's part of life.

So you have to sort of be ready for it. That's my strategy.

Full price, you haven't been able to modelize them. Well, same thing for us.

Our strategy is the industrial cost price and the evolution of the exchange rate to offset. So we take options, but we try to smoothen out our exchange over the year -- our currencies over the year.

So that's -- and then we do a weighted average, if we were between 5% and 6% of a price increase for 2026. For the margin, and when I start talking about margin, Eric starts to tremble.

We are a fixed cost company. We accompany with the fixed costs.

We're doing better than expected in Q4. It goes to the margin.

immediately. Second thing is the exchange effect on the margin.

It's very complex to manage, because you have what you expected the drop in revenue, significant, EUR 500 million. And then you have your cost that drops.

You have an accretive effect as well. So sometimes a drop in revenue on a margin that you've hedged can give you a accretive effect.

So I had a bit of a shock, because Q4, we did plus 10%. We spoke about a Q4 at minus 7%.

You talked about the exchange currency effect, not to the group. The exchange effect, as usual, third year a bit negative and we think for other currencies to go up as compared to the euro.

But 2026 exchange effect will be unfavorable for us. Luca.

[Interpreted] Luca Solca from Bernstein. I'd just like to go back to your earlier comments on demand and on aspirational clients.

Over and beyond what is happening in China, we have a bit of a concern on this splits between your customer base. What is your perspective on demand all around the world?

Because we see that the middle class is not showing up as much in this aspirational client base? And what about demand generally?

And just to tying to all of this, could you also say a word about Jewellery so that I better understand your perspective and your vision to grow the Jewellery division? And how are you going to serve an aspirational customer base if you go for this kind of high-end Jewellery?

What is the right balance between the two? And you also talked about upstream investments.

Now you're probably in a leadership position when it comes to vertical integration. So my question is what can you do in terms of investment over and beyond leather workshops?

[Interpreted] Well, thank you very much for your question. The first one is quite difficult.

The others are a little bit easier. So first of all, Hermes has got a large number of clients all around the world.

And we have a lot of people in the middle class that can afford Hermes products. If we didn't serve the middle class, we would only have 15 stores around the world.

So when we set up in a country, it's because we believe that there's a middle class that can afford and wants our products. Now we set up these stores in areas where we had the aspirational clients, not always middle class, by the way.

I'm not as worried as you are insofar as it's not true that the middle class is suffering all around the world. It is true in France for sure.

But you can see that local customers turn up in Europe. Look at the figures for Italy, for countries in the north of Europe.

We have people in the middle class that shop in our stores and buy our products. So the middle class is not struggling all around the world.

It's true for France, but not everywhere. If we are struggling a bit in Switzerland, it's because of our setup and the store, but it's going to, we're going to open up something bigger soon.

So it will compensate that. What we see from a structure point of view is that we have new clients who come, because people are getting richer in South Asia, Latin America also is improving.

And then in the United States, we have a very broad customer base, which allowed us to have this plus 18%. So don't just look at global trends through the European lens.

Now Jewellery -- Jewellery is the first division that I managed at Hermes. There were 7 of us at the time.

And at the time, I was told, don't worry if you get things wrong. It won't be noticed in the accounts of Hermes.

It was not a very nice comment, but it kind of set me free as well at the same time. Our very first jewel was produced in 1928.

So as you can see, I know the history quite well. In 1937, the [indiscernible] designed by my grandfather, who saw it in a [indiscernible].

Now when I took over the Jewellery division, we were very lucky, because we had a fantastic designer. We talked about Veronique earlier, but there was [indiscernible] Jewellery and we continue to work with him.

95% of what we sell is made of silver. I came back -- I come back from Asia and Asia, they tend to buy gold more than silver, also because they are very humid countries and gold doesn't oxidate.

So we launched a gold Jewellery at a time, which makes up roughly more than 2/3 of our revenue. So we grew Jewellery very quickly in excess of EUR 1 billion of income.

So that's quite great. On top of that, there's also this freedom to create, but we also wanted to create high-end pieces.

We call it [Foreign Language] in French. Nobody really understood that particular name and concept.

So that's why I'm reminding everybody of it. Since I created it, it's close to my heart.

But if you see [Foreign Language], you'll understand that I would have lost that particular battle. But what is interesting with Haute Bijouterie is that there's a lot of work on the design.

It's not just one stone and then stuff around it. I only stayed for 3 years at Jewellery.

Other people came over and have done a much better job. And have contributed to the great success of Jewellery at Hermes and it's the division at Hermes over the last 15 years that has grown the most, and I'm very happy and proud about it.

Now going back to your question on integration. We started buying up shares in Jewellery.

And we now have shares in a few Jewellery companies. Now Jewellery is a fragmented landscape.

We also have individual craftspeople who work for us. We've had partners for more than 50 years.

We continue to work with them. We've invested in Italy, in shoemaking.

There's a production workshop there. For perfumes, we are also growing our activities with ambitious plans.

We also have watchmaking at Hermes that we continue to invest in to ramp up our production capacity. So this is really the specificity of Hermes, whereby the main position at Hermes is the cross people.

They make up 60% of the headcount. And it's a fixed cost.

When it works, it works really well. And sometimes, we have to -- with these difficult situation.

And we love to work with partners. We have to be modest and humble.

And sometimes they are more agile and better than we are. So that's why we reach out to them.

But yes, we do a bit more integration and divisions to protect these suppliers and partners. For instance, if my grandfather, and father and uncle would come back to say, and you've made a huge mistake, it might be right, but not when we invested in Tanneries, for example.

We invested a lot in this area in France. I think that it's paid off really well.

When we are the only ones that can invest to preserve quality, then we need to do it. And when you work with great partners and we have fantastic partners who've been around for more than 25 years, and it's a greatest, great story and the third generation that, for example, has been working with the silk workshops in Lyon.

[Interpreted] [indiscernible] I have three small questions. One on China.

On your network of stores, I think you've accelerated the pace of opening of stores in China. Can you tell us what will be the size of the network?

Well, sort of dimensioned in China because you are now quite cautious in your openings. Second question on perfume.

You said a year that was not that great. At the end of the third quarter, it was a buoyant market.

Then on the haute couture, a lot was said about it last year. I know you will explain to me that you're waiting to be ready.

[Interpreted] That's true says Axel.

[Interpreted] But you have better visibility. Do you have a better visibility on the date on which you will be ready?

[Interpreted] On China, we remain straight, I don't know. We remain straight on our strategy.

You have [indiscernible] on the call in the first row, who heads the retail network, who headed China as well and he's great. Everybody I know who compliments the team.

So I want to do the same. And so what did we decide a few years ago?

In China, we asked ourselves the question around [indiscernible] saying do we increase? Do we remain with the number?

Then we said China is a territory of conquest, but we have to remain reasonable. The idea is not to go everywhere.

So as a strategy that we've been pursuing for the last 10 years. So not too many stores, and we tried to conquer, put sales in a new town once a year.

And we follow that. We follow that.

And then, of course, between the problems of construction, sometimes it's in a year. Sometimes when I open one in Shanghai, then it's big -- so we don't open another one that following year.

So we have 32 stores in China today, and we remain on something that is quite stable. It will grow at our pace slowly.

To be sure, we have a long-term vision. We're not stop and go.

What's interesting is with regard to the China situation for several years, we haven't cancelled a single project. We continue to roll out our plan as we have worked on it.

Perfumes, fragrances, I prefer to be honest saying that it's -- in the half shades as it were. My teams are [ pulling a ] face.

On fragrances, interest, difficulty on perfume as such and not on makeup and beauty. I think there are things that we can do better, frankly.

I always tell the teams what can we do better. People will say, "Oh, the market", yes, but we do have levers.

There are certain things that we can do better, and we're working on it. The second thing, contrary to the rest of the group, they depend a lot on wholesale retail distribution in duty-free with distributors.

So everybody is not doing as well as Hermes, and sometimes you have partners that have preferred to buy less to manage their inventory. So we continue our perfume development strategy, which is to grow to have the necessary sort of mass to have autonomous subsidiaries and to launch ourselves in the three industrial areas perfume makeup that we've launched and tomorrow skin care.

What will come before skin care and haute couture, which one will come first? I would say on haute couture, we started with something that we like.

We recruited workshops, we recruited seamstresses. And then we'll be ready when we'll be ready.

Again, I'll be [ called ] what I saw was superb. I'm quite excited because, look I'm really quite excited.

And I'm very proud of what the teams have done. And then it has to be finished at the right time.

And -- but it's on its way. Yes, please.

Yes.

[Interpreted] Tom Chauvet from Citi. Three questions.

First of all, Axel, you mentioned the current trends in China and the fact that you're sticking to your guns from a strategy point of view. Could you tell us about the changes in customer behavior in China?

We see that the domestic demand is lower, that there's more tourist demand in Japan, for instance. And you have some local brands as well.

15 years ago, you created Changsha, a local brand. You were a pioneer in this area.

What do you think of these local Chinese brands, a brand that you've discontinued since? Secondly, just to go back to the margin and price increases, that increase of 5% or 6% in January, does it offset the exchange rate effects and the increase in prices in labour costs and raw materials?

In the past, you gave us annual forecast on that. Could you tell us more maybe this time around?

And on net cash flow, which is at EUR 13 billion, you have the biggest net cash position in the business but also the company that has the less appetite for acquisitions. So over and beyond vertical integration and organic investments, what are the major opportunities that you see to invest this cash.

Are you going to buy back shares invest in real estate? Tell us a bit more on that.

[Interpreted] Maybe I'll start with the margin. Are you scared about what I might say on the margin?

On the margin, as Axel said, we have a price increase, which sits at 5%, 6%. And that was calibrated to cover our production costs.

There are some materials that are more expensive like gold, for example. And then there's also the EUR 120 bonus that we pay out to all employees in France.

So that's also a production cost, and we kind of compensate this with a price increase. And then there's the exchange rate effects.

Of course, we've got the hedging strategy, which helps us to compensate the negative impact, but it is nonetheless a negative impact of EUR 200 million for 2026. In 2025, we enjoyed a conversion effect, which is not predictable because it's down to the average rates, but it helped us to half the hedging effect.

But for 2026, no one can predict the level of the yen or the dollar at the end of the year.

[Interpreted] Well, it's a good job that Eric answered because I would have probably said more and probably a bit too much and got [ tored ] off. So to answer your question on China, there is one thing that I believe has changed since the beginning of the year 2010.

And that is the fact that the appetite for spending on luxury items has got nothing to do with GDP, but rather has a lot to do with the stock exchange and the change in the real estate market. So -- and actually, this is what you see in China.

GDP continues to grow, but there is a lot of concern about people's wealth, their financial investments. We see that financial markets are going back up in China.

But I think this is a trend which then allows you to understand people's appetite for luxury items, more than GDP in any case. In China, we see that leather goods are performing really well and is a very solid pillar.

And then we have two other divisions that work very well. Women's Ready-to-wear and Jewellery.

In other words, divisions that are high-value divisions for us. So that is the case today and will continue to be the case in the future.

And I think it's great to note that they are Chinese brands. I'm not part of these people who are glad when other people encounter problems.

I believe that more our industry is successful, more brands are successful, the better we will all be. So I think it's great that China is growing brands.

Brands that offer products that they're very different to ours. Like, for example, their jewels are very different.

They're very Chinese. It's a different know-how as well, and I find it very interesting and amusing.

Now I'm going to be told off once again, but Labubu, for example, was quite amusing in New York Times. There was an article the headline was, could Labubu have existed without the Birkin?

It's quite amusing if you think about it. And then there's some Chinese brands that you see breaking into Europe as well.

And I saw so in the press in sportswear that there are some Chinese brands, and we're already very strong in China. And now they are conquering markets outside of China.

So I'm not trying to be the only brand in the world and wanting everybody to come to Hermes. No, the more brands they are, the more appetite there will be, and that appetite at one point will be valuable for Hermes.

So I think it's a positive sign more than anything else. And then your third question was on cash.

So I'm going to answer this one on cash. Eric, is that right?

Yes. So yes, it's true that Hermes continues with its strategy when it comes to cash.

We use our cash flow, roughly 1/3 for dividends, 1/3 for investment and 1/3 for our cash flow so that we can be resilient in the future with strong financial structure and remain independent. This year, we don't have an exceptional dividend.

Otherwise, it wouldn't be exceptional, because it would have been the third year on the trot. So it will remain exceptional, and we'll probably make a comeback in the future, but we've increased the ordinary dividend which is perfectly in line with our traditional way of doing things.

So our net profit was a bit lower, but not the one before tax. So we continue a bit like with foreign exchange rates, we continue with our usual strategy.

[Interpreted] Well done for these results from HSBC. I only have two questions.

I wanted to come back to the growth long-term growth algorithm, because I had understood that with the development of new production sites of until 2030 continue to develop higher volumes by 6%, 7% from historical average. The 5%, 6% price increase this year does one consider that as being exceptional because of the cost threshold fixed or catching up with increases that were less moderate elsewhere?

In the long term, do we consider that you are in 6%, 7% of volume and less in price in the long term? Then real estate, we've foreseen many projects, quite impressive projects in luxury in the U.S.A.

with very big openings in all the brands, Moncler, Dior, Vuitton and I have seen an announcement this morning on a project that you had in Rodeo Drive. I was wondering whether you could explain to us why according to you, there are such big projects.

And what does it tell us about the potential that the U.S. represents in the future?

[Interpreted] Very well. Price policy, you're right.

Now I repeat what I said, for us it's first the cost, the production cost. This year, we made an increase beyond inflation.

I spoke of EUR 120. We're very manual.

So that's part of the industrial cost price. So this is increase in and then a loss of EUR 500 million a year in sales because of currency effect, and that was the case in other years.

So the years where you have a depreciation of the euro positive, then the appreciation of the dollar, we have less price increase, because we needed less to offset. But there is -- there's a [ question ] we sell a lot in France, including in Europe, including in France.

So I don't need to add the price for the exchange rate. But we have a specificity which makes us cautious in the currency management, is we've never dropped up, reduced our prices.

We never do. And therefore, you have to be careful when the currency goes up and down.

And when you don't come to our price positioning at the local currency, which becomes too complex. That's our strategy.

We continue with it, but we have to recognize the fact and congratulate Eric, that our currency hedging has stood good despite, and the world where the currency volatility has become quite strong. The second question on the U.S.A.

And sometimes we find it difficult to read, but for the U.S.A., well, I feel like saying that our strategy. We have a strategy with [indiscernible].

We don't need more stores, but we make bigger stores, more beautiful stores, better place if need be in order to present all the divisions, all the materials. May I remind to the [indiscernible] -- when I started as CEO, the stores were 313.

Today is 297. We don't need more stores.

We need them to be bigger, more beautiful. We opened a new store in Madison several years ago, which is the second largest of the group.

So it's really quite marvelous. And we're very happy with this maison, which is a lot of character.

We'll be opening another maison this year. We're very excited in Bond Street, which is a building that we had bought 13 -- 18 years ago.

So we really do see things in the long term, and we are very happy to open it. It's at 166 New Bond Street, and it will be on the 166 at the address of 166.

Yes, 16th of June 2026. So you see how much superior intelligence we deploy for the opening date.

The rule of the stores dates back to [indiscernible]. It's the customers who pushed the walls of the stores.

In Rodeo Drive, Beverly Hills, the store that we love, we're owners of the store is becoming too small. We don't have the right to increase it upwards.

So for the future, we made a significant purchase which will allow us in the future to have a project that we deem will be great, but there are tenants at the moment. So maybe it will be a gift.

When we bought Asprey, I thought it would be for the seventh generation. And finally, we're doing it.

Rodeo Drive, will it be for the seventh generation? Will it be for us?

We'll see. But the idea is to think in the long term and obviously, the success of certain of our stores, Rodeo Drive is part of this, the store is too small to receive enough customers and the stock that we need to present and ideas not to have more stores, but better stores.

Maybe a last question.

So I have two. I hope you can hear me.

First of all, I was just wondering why the marketing expenses were a little bit lower last year. I think that maybe throughout the year, you were guiding to something around EUR 700 million, and it ended up being around EUR 620 million, also lower as a percentage of sales.

So I was just wondering if this is maybe the new level of marketing we should expect going forward? Or maybe some of it got pushed out to this year?

So that's my first question. And second one is on leather goods growth, sort of the volume you're expecting in the long term.

I think you've previously commented that you expected volumes to grow 6%, 7%, which -- I'm just wondering if this is something how long this can continue for? Because you are obviously investing in a lot of new workshops.

And at the same time, there is at some point, scale, sort of effect of the size, and we are seeing quite a few bags in the second-hand market, which I know you don't necessarily like, but it is what it is. And I think consumers can find on a lot of websites.

So I'm just wondering, if you know at some point, you will be maybe considering changing that long-term algorithm of growth and just to protect the brand? And also how long -- how much longer for can you grow the volumes at 6%, 7%?

Right. Thank you.

For the marketing expense, I think the level that you've seen 3.9% this year is quite good. We're not trying to spend for the sake of spending, because of the size of the group now.

And I mean, I said the turnover, it's allowed us to have what we need and what we like to do with our communications team. So we are not short of budget, but so it's I think it's a good ratio.

Is it going to be like that for all the year coming, I don't know, but you see more than EUR 600 million of marketing, et cetera, of communication, as we call them, expense has helped us to do what we wanted to achieve with that. Regarding the leather goods, our perspective is unchanged.

It's complicated to have a figure for you that makes sense, because we are hiring around 250, 300 new craftsmen per year. We cannot do that much more, because we need to train them.

And it's very important to train them. We have some of our best craftsmen who stopped producing and we trained them.

So we calculated in our own model that, that was the right level of training for them. Then actually, one thing that changed also across the year is productivity.

I would say, to be a good craftsman at Hermes, it takes you 8 years. You will learn at least for the 8 years to do all the model, you will want to do other kind of skin.

You will do a lot of things. So it's not just a question of arithmetics about how many new people you put.

It's also about how well they are able to change and move. So that's why we are quite confident that our growth that we announced in the [indiscernible] can be sustained in the near future.

And you've seen our plans so far that I explained, we are up to 2030 so that gives us also a little bit perspective for us. Thank you.

[Interpreted] And now a couple of questions just to wrap up.

[indiscernible]. Can you maybe go back to Europe because the bulk of customers what locals or tourists, because one of your peers are very pessimistic about Europe and about tourist customers because of foreign exchange rate effects?

[Interpreted] Well, we are very optimistic when it comes to the euro zone, because we have a very strong local customer base in these countries. For our distribution subsidiaries, their objective is to have a strong relationship with local clients.

And that is something that's quite unique at Hermes, that people will buy in their local store. In China, for example, Chinese customers mainly buy in China.

You will have noticed that the figures for Japan are still great. It's because we have a very loyal, local customer base there.

Now if you just want to take a more granular look at Europe, you could say that France depends quite a lot from tourist clients, but the rest of Europe has a very strong and dynamic local customer base. But we are very much optimistic for the Europe area, Eurozone and non-Eurozone, which is a good news because we are opening a big flagship in Bond Street.

And in Geneva.

[Interpreted] Carole Madjo from Barclays. Another question on the U.S.

market. The market then grew a lot in 2025.

What do you think the sentiment is in the U.S. a very polarized market?

What is the customer behavior as you can see it there? Do you think that double-digit growth is possible in 2026 when you take into account pricing effect and with new stores opening in the U.S.?

And final quick question, on the tax rate in 2026. Could you give us a forecast on that.

[Interpreted] Question on tax will be for Eric. For the U.S., I'll take that question.

Sometimes we overlook people or countries that do well. It's probably a French bias.

The U.S. market is doing very well.

There is no change in the trend as we see it. And what is very positive is that all areas in the U.S.

are performing really well. We were slightly affected the year before that with the fires in California.

And I mentioned these events that can't be foreseen. It was the case for California.

But otherwise, California is doing very well. Scottsdale and Nashville great opening.

So there's a strong momentum in the U.S., and it's a very broad momentum as well, but yes, we don't see any changes in trends for the U.S. And the question on tax.

Back to you, Eric.

[Interpreted] The strength of the U.S. is to have this very well distributed growth across divisions and across the regions in the U.S.

Now on the normative rate, we'll have this additional tax at least next year. But if you take away the 5 percentage points that I mentioned earlier, we are at a normative rate of 28.5 without including that additional tax, just to clarify, but this additional tax will be carried over to next year.

[Interpreted] And we'll see how long this exceptional tax will remain exceptional. It's likely the exceptional dividend.

We hope that it just happens for a couple of years, but maybe this exceptional tax will be a feature in years to come. Thank you very much.

It's always a pleasure and have a great day.