Hi Everyone,
This is an interview from Saturday's New York Times .... I copied the enitre thing because the site is becoming more private and I have had trouble when giving people links there....so I apologize if the paste if lousy or oversized, as many of you know, my tech-skills are less than desirable.
Saturday Interview
Hermès Is So Much More Than Silk Scarves
David X. Prutting/PatrickMcMullan.com
Patrick Thomas, the chief of Hermès, was at the opening of the store on Wall Street in New York.
By TRACIE ROZHON
Published: July 28, 2007
Patrick Thomas, the elusive chief executive at Hermès — elusive to reporters and analysts at least — seemed downright expansive over lunch recently at his hotel only a few blocks from his new store in New York City’s financial district.
The company’s Wall Street store opening was several days away, but the windows were already done: a motorcycle with a black leather outfit on one side ($5,700), and a deconstructed horse sculpture on the other, with a superb black saddle resting on the window ledge, safely behind glass. ($4,500).
For those who think of the company, which has $1.9 billion in sales, as the purveyor of conservative silk scarves with bridle motifs and capacious handbags carried by Grace Kelly, the Hermès windows were eye-opening.
So was Mr. Thomas, who, despite his English-sounding name, is very French. He is the first nonfamily member ever to run the company, which is public but still very much controlled by the descendants of the founder. He offered opinions on the company’s philosophy, its pricing and some as-yet-unannounced new ventures. Following are excerpts:
Q. Do you consider Hermès a daring company?
A. Yes, within reason. The motorcycle is just the modern expression of our origin: the horse. And the horse in the window was made with spare parts from a car. We loved it, we bought it. I have no idea who made it.
Q. Do you ride?
A. No, I did a few times, that’s all. Some members of the family have horses.
Q. Hermès is known as a leather goods brand run by perfectionists. Are you a perfectionist?
A. If you saw the reasons why some things are rejected by our craftsmen, you would say: “These people are crazy.” The quest for perfection is crazy, but we all insist on it.
Q. One luxury analyst told me that Hermès is a model every other luxury brand aspires to, but added that he would like to see better earnings growth and momentum because you are so firmly at the top of the pyramid.
A. I would agree with that statement.
Q. And what about your sales in Japan?
A. Yes, there has been sort of a stabilization of that market; it is still a very big market, it is still a quarter of our business.
Q. You have two classes of stock ownership, don’t you?
A: Yes, there are active partners and there are sleeping partners. The active partners make up the controlling board. They appoint the C.E.O. They can sack me tomorrow morning. But they give me more or less freedom — just like a normal company.
Q. I’ve heard that the family members have a pact not to sell their shares.
A. Yes, the family has a pact to hold onto its shares for at least six years; it’s a general pact. It’s clearly not their intention to sell, but as you say, never say never! As long as the fifth generation is around ... I think the sixth generation will stick to it, too. There is enormous loyalty which has been transmitted to the children.
Q. What’s happening with the luxury market? Many have predicted it will start to weaken, and some companies have in fact weakened.
A. Today much of what we call luxury is no longer luxury. Call it luxury if you want, but some companies no longer have the quality. At Hermès, a woman walked in with a saddle not long ago, and she complained it needed restitching. We checked the records — we keep all records, even of repairs — and it was her grandmother’s saddle, purchased in 1937. We fixed it, of course.
Q. What fields are you branching into? I know last year you began selling smaller, lighter and cheaper silk scarves — $205 versus $325?
A. We are planning now for the next step: to develop — to extend and boost — the house. We call it art of the house: bath towels, robes, vases, furniture, luminaires. There are plenty of things in the pipeline: new lines of ties, dresses, jewelry.
Q. Your Birkin handbags sell for as much as $10,000 — maybe more, depending on the type of skins used. Is there any limit, a point where consumers will say: “No, not one euro more?”
A. There is always a price limit. The best example is Japan. This year the yen went down sharply against the euro, so we had to increase our prices. Many people told us they were not going to pay; everyone is sensitive to price.
Q. I was surprised to see Hermès in an airport somewhere. Is an airport boutique consistent with your company’s refined image?
A. I would say we do them less and less, but wherever we are, we make the shops larger and larger. Anything smaller than 200 square meters is difficult. The new Wall Street store is 500 square meters — and I would have loved to see 600.
Q. Why didn’t you get it?
A. We loved that location.
Q. Are you building more shops in the United States?
A. Yes, we are going to expand, but not necessarily the number of doors. We will definitely increase the size. We opened a store in Charlotte in March, 300 square meters, and we have 17 large stores in the United States. In five years, we expect to have 23.
Q. Do you have enough of a variety of items to fill all these bigger stores?
A. We have a very broad range of products: 50,000 SKUs. If we want to show our diversity, we need a significant size, we can’t have a series of boutiques.
Q. Are you going to be expanding your clothing selections?
A. Did you know that fashion makes up 25 percent of our business? Jean-Paul Gaultier succeeded Martin Margiela when he resigned and sold his name to Diesel. Diesel said he had to work exclusively for Diesel. Jean-Louis Dumas, my predecessor, called Gaultier and asked: “Do you know anyone who could replace him?” Two weeks later, they met and Jean-Louis said: “Do you have a name?” and Gaultier said “Me.” Jean-Louis Dumas was over the moon!
Q. And you don’t call that choice daring?
A. It’s a nice combination of traditional materials and a very now designer. We are daring, but daring in a very natural way.
Q. Luxury companies used to pride themselves on only making their clothes in, say, Italy. Does Hermès make anything out of France?
A. Well, we do buy some silk in Brazil, but we weave it ourselves in France, we print it ourselves and we hand roll it ourselves. Our watches are made in Switzerland, and some of our cashmere comes from India. Eighty percent of what we sell is made in-house.
Q. Is there pressure from Wall Street to produce more goods more cheaply, perhaps doing more in other countries?
A. Many people look at the short term. The family is very good, they understand the long term. They will say: “This is a good project: take five years to develop it.” It took us 10 years to develop our fashion business; it took us at least 10 years for tableware, but now we are happy. If we started to produce and sell cheaper bags, with a big H, our profit would explode. But then there would be no Hermès in five years.
More Articles in Business »
This is an interview from Saturday's New York Times .... I copied the enitre thing because the site is becoming more private and I have had trouble when giving people links there....so I apologize if the paste if lousy or oversized, as many of you know, my tech-skills are less than desirable.
Saturday Interview
Hermès Is So Much More Than Silk Scarves
Patrick Thomas, the chief of Hermès, was at the opening of the store on Wall Street in New York.
By TRACIE ROZHON
Published: July 28, 2007
Patrick Thomas, the elusive chief executive at Hermès — elusive to reporters and analysts at least — seemed downright expansive over lunch recently at his hotel only a few blocks from his new store in New York City’s financial district.
The company’s Wall Street store opening was several days away, but the windows were already done: a motorcycle with a black leather outfit on one side ($5,700), and a deconstructed horse sculpture on the other, with a superb black saddle resting on the window ledge, safely behind glass. ($4,500).
For those who think of the company, which has $1.9 billion in sales, as the purveyor of conservative silk scarves with bridle motifs and capacious handbags carried by Grace Kelly, the Hermès windows were eye-opening.
So was Mr. Thomas, who, despite his English-sounding name, is very French. He is the first nonfamily member ever to run the company, which is public but still very much controlled by the descendants of the founder. He offered opinions on the company’s philosophy, its pricing and some as-yet-unannounced new ventures. Following are excerpts:
Q. Do you consider Hermès a daring company?
A. Yes, within reason. The motorcycle is just the modern expression of our origin: the horse. And the horse in the window was made with spare parts from a car. We loved it, we bought it. I have no idea who made it.
Q. Do you ride?
A. No, I did a few times, that’s all. Some members of the family have horses.
Q. Hermès is known as a leather goods brand run by perfectionists. Are you a perfectionist?
A. If you saw the reasons why some things are rejected by our craftsmen, you would say: “These people are crazy.” The quest for perfection is crazy, but we all insist on it.
Q. One luxury analyst told me that Hermès is a model every other luxury brand aspires to, but added that he would like to see better earnings growth and momentum because you are so firmly at the top of the pyramid.
A. I would agree with that statement.
Q. And what about your sales in Japan?
A. Yes, there has been sort of a stabilization of that market; it is still a very big market, it is still a quarter of our business.
Q. You have two classes of stock ownership, don’t you?
A: Yes, there are active partners and there are sleeping partners. The active partners make up the controlling board. They appoint the C.E.O. They can sack me tomorrow morning. But they give me more or less freedom — just like a normal company.
Q. I’ve heard that the family members have a pact not to sell their shares.
A. Yes, the family has a pact to hold onto its shares for at least six years; it’s a general pact. It’s clearly not their intention to sell, but as you say, never say never! As long as the fifth generation is around ... I think the sixth generation will stick to it, too. There is enormous loyalty which has been transmitted to the children.
Q. What’s happening with the luxury market? Many have predicted it will start to weaken, and some companies have in fact weakened.
A. Today much of what we call luxury is no longer luxury. Call it luxury if you want, but some companies no longer have the quality. At Hermès, a woman walked in with a saddle not long ago, and she complained it needed restitching. We checked the records — we keep all records, even of repairs — and it was her grandmother’s saddle, purchased in 1937. We fixed it, of course.
Q. What fields are you branching into? I know last year you began selling smaller, lighter and cheaper silk scarves — $205 versus $325?
A. We are planning now for the next step: to develop — to extend and boost — the house. We call it art of the house: bath towels, robes, vases, furniture, luminaires. There are plenty of things in the pipeline: new lines of ties, dresses, jewelry.
Q. Your Birkin handbags sell for as much as $10,000 — maybe more, depending on the type of skins used. Is there any limit, a point where consumers will say: “No, not one euro more?”
A. There is always a price limit. The best example is Japan. This year the yen went down sharply against the euro, so we had to increase our prices. Many people told us they were not going to pay; everyone is sensitive to price.
Q. I was surprised to see Hermès in an airport somewhere. Is an airport boutique consistent with your company’s refined image?
A. I would say we do them less and less, but wherever we are, we make the shops larger and larger. Anything smaller than 200 square meters is difficult. The new Wall Street store is 500 square meters — and I would have loved to see 600.
Q. Why didn’t you get it?
A. We loved that location.
Q. Are you building more shops in the United States?
A. Yes, we are going to expand, but not necessarily the number of doors. We will definitely increase the size. We opened a store in Charlotte in March, 300 square meters, and we have 17 large stores in the United States. In five years, we expect to have 23.
Q. Do you have enough of a variety of items to fill all these bigger stores?
A. We have a very broad range of products: 50,000 SKUs. If we want to show our diversity, we need a significant size, we can’t have a series of boutiques.
Q. Are you going to be expanding your clothing selections?
A. Did you know that fashion makes up 25 percent of our business? Jean-Paul Gaultier succeeded Martin Margiela when he resigned and sold his name to Diesel. Diesel said he had to work exclusively for Diesel. Jean-Louis Dumas, my predecessor, called Gaultier and asked: “Do you know anyone who could replace him?” Two weeks later, they met and Jean-Louis said: “Do you have a name?” and Gaultier said “Me.” Jean-Louis Dumas was over the moon!
Q. And you don’t call that choice daring?
A. It’s a nice combination of traditional materials and a very now designer. We are daring, but daring in a very natural way.
Q. Luxury companies used to pride themselves on only making their clothes in, say, Italy. Does Hermès make anything out of France?
A. Well, we do buy some silk in Brazil, but we weave it ourselves in France, we print it ourselves and we hand roll it ourselves. Our watches are made in Switzerland, and some of our cashmere comes from India. Eighty percent of what we sell is made in-house.
Q. Is there pressure from Wall Street to produce more goods more cheaply, perhaps doing more in other countries?
A. Many people look at the short term. The family is very good, they understand the long term. They will say: “This is a good project: take five years to develop it.” It took us 10 years to develop our fashion business; it took us at least 10 years for tableware, but now we are happy. If we started to produce and sell cheaper bags, with a big H, our profit would explode. But then there would be no Hermès in five years.
More Articles in Business »
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