Good morning to you all. I'm very pleased to be here with you this morning. I'm sorry that we cannot all be together in this room this morning. 1st and foremost, I would like to thank all group employees We've demonstrated a great deal of courage, solidarity and agility as well as creativity throughout 2020. I'm especially thinking of everyone who was and continues sometimes to be impacted by the disease.
Such a large scale crisis reminds us of the importance to focus on who We are and what we're able to control such as our business areas. It's also an opportunity to make choices and to talk about decisions made in the past. I can say that this global crisis shows the relevance of our model, placing human beings at the very center of it all and creation at the center. We're focusing on everybody's intelligence and sensitivity. We're also focusing on commitment and responsibility.
This all was very important to managing the crisis. To deny this Health situation, we wanted to be sure that Air Mass acted as a responsible player, showing solidarity, showing responsibility, first of all, protecting all of its employees by enacting all necessary measures also through our local management. We maintain jobs and base wages worldwide without using government subsidy. Furthermore, a onetime bonus will be given to Group employees in 2021 to thank them for their commitment. Next, we've shown our solidarity to local areas.
Hermes donated €20,000,000 to the Paris Hospitals, the APHP. We would thank our Le Vaudreuil teams who produced 45,000 liters of hand sanitizer. We also donated 145,000 PPEs to health Providers. I would thank actions in all of our local subsidiaries in the various countries where we're active that have organized over 80 Initiatives to date. I'd also talk about commitments to our partners and suppliers, assisting them to adapt by placing orders and extending terms of payment.
Hermes has used the solidity and the agility of its Artisans business model. We've shown several major trends, positive dynamics in Asian markets. We've seen increased Digitization, we've also seen the importance of CSR during this period. Worldwide, our local customers have been highly L'Oreal, offsetting reductions in tourist flows, Hermes has been able to contend with the challenges, thanks to the Quality of its products, creativity and innovation making it possible to constantly reinvent who we are. Creation is the best response to crisis with unique objects that are sustainable, long lasting and highly sought after.
Integrated production, remember, over 60% of our group. It's within France. 80% of our items are produced in France. We have a mastery and excellence of our know how, practicing a craft versus just carrying out a task. Our distribution network is exclusive omnichannel, which has demonstrated just how effective it has been During the crisis, we've been able to adapt our tools to quick changes in demand, thereby maintaining a special relationship with our customers.
Economic independence and strict financial management have enabled us not only to maintain wages without government subsidy, but also to continue slated operating investments. Now let's talk about business activity. In spite of the health crisis, Group activity was resilient with very strong momentum in sales in Q4, up 16%. Revenue reaching €6,400,000,000 in 2020, which means a drop limited to 6% at constant exchange rates. Group Stores showed strong resistance.
Sales only down 2% for the year after Q4, which Saw growth of more than 21%. First of all, we thank our customers worldwide who've shown their appreciation of this company. We also thank our teams for their involvement in the stores. Now firstly, let's talk about France, minus 29% And Europe, excluding France, minus 20%, were impacted by the closure of some of the stores. Reduction in tourism flows, to some degree, offset by local customers.
Japan next, minus 4%, displays especially strong recovery since June, thanks to loyalty of local customers. Asia, excluding Japan, continues its strong growth driven by an excellent Q4, up 47%. Inter Alia, thanks to good momentum from China, Korea as well as Thailand. The new digital platform was rolled out in Hong Kong, Macau and Korea in the first half. The Americas, minus 21%, recovering gradually in the second half, growing slightly in Q4.
The Wynn store in Las Vegas was enlarged and refurbished in October, Short Hills in New Jersey in November. The geography changes versus last year, reflecting strong growth in Asia as well as greater impact of store closures in Europe and America It's a good geographical balance limiting any excess exposure to one given country. Let's talk about revenue by sector now. In 2020, Business in stores resisted well and wholesales dropped 32%, Impacted inter alia by Travel Retail Leather Goods and Saddlery, minus 5% resumed growth in the second half with an acceleration of growth in Q4, up 18%, reflecting sustained demand, buoyant demand and gradual recovery of deliveries. Development projects continue.
As we've seen, Hermes is Reasserting its strong territorial footprint in France. Ready to wear and accessories, minus 9% speeded up growth in Q4, up 12 Send, the SpringSummer 2021 Women's Ready to Wear Show was very well received after the men's collection beginning of July. Silicon Textiles and Fragrances saw the impact of a drop in tourism. After a very successful launch of the 1st lipstick collection being in February, The beauty sector continues to perform well. Watch is plus 22%, confirms its growth, excellent Q4, up 28%.
Lastly, other Hermes sectors, plus 24%, including jewelry, Aldevivre and tableware, strongly growing. Sectorial distribution remains fairly stable versus 2019. We only see a slight drop in the more exposed sectors more exposed to travel retail such as Silk and Textiles and Perfumes, there's a good balance here. Leather and Saltery continues to represent half of business activity. 2020 results were very strong.
Operating income reaching €2,100,000,000 thanks to a very good second half. Operating profitability reaching 32.4 percent of sales. Consolidated net profit group share €1,400,000,000 Decline limited to 9%. Restated net cash almost €5,000,000,000 Eric Du Algoette will come back to the points. In spite of the difficulties, we've shown the uniqueness of our style with collections that are rich and innovative.
I thank all of the Teams with the artistic management and the various metiers. I've mentioned the successful launch of Beauty, adding to the leather goods collection with the Cendons Cre, Birkin Cargo and the Sachemenese bags, the beautiful welcome of the Women's Ready to Wear and Men's Ready to Wear, the successful launch of the haute jewelry collection, Linea Sansibla and the new table service, Passifolia and then the launch of Apple Watch Series 6.
We've mentioned this already. It is confident in the future and in our integrated local artisanal production model that we pursue operational investments in our production capacity in France. We have laid the first stone of the Louvier leather working Welcome, followed by Guyenne, Gironde, Montourou and Saint Emain with inauguration slated this year. A new production site is planned in Ardennes 2023, and a new leather workshop is planned for Indi Auvergne by 2025. We've pursued extension of the Pierre Benite site in the textile hub in Lyon.
And finally, we've acquired the J3L in Metal Trimmings, the supplier. So COVID-nineteen has strengthened the bottoms of e commerce, which was already at the heart of our omni channel strategy. We've made an effort for the last 5 years by choosing to strengthen and ramp up our e commerce platform all over the world in Asia. I reminded you the creation of the site in China in 2018, the rollout in Korea and Hong Kong in the 1st semester. What is more 2020 also saw the opening of the first e commerce website in the Middle East.
With the acceleration of traffic, Conversion rate and 75% of new customers, success of our platform is confirmed. Hermes has pursued the strengthening of its physical retail network. Operational investments have been pursued in the stores, making it possible for our impactful presence of our collections in the city centers closer to our local customers. Indeed, we've pursued the extension of our network in Osaka, Moscow and Madrid this year. Let us now move on to the communication of MS.
Here again, we had to adapt and invent new formats in order to maintain our presence, remain a safe haven and optimistic in a difficult context while sustaining our renewed link with our customers. The teams have shown agility, creativity in the development of new strategies Communication to respond to an environment which was permanently changing and evolving. I'm thinking of the totally new Format of the Men's Ready to Wear show designed by Cyrille Test. We've been able to accompany the rising importance of the influence of digital, but we've maintained the paid investments. LMS wishes to leave a positive impact on the world.
During this very Particular year, we reasserted the importance of our values through our actions and our commitments. First of all, we're supporting employment. Hermes is today 16,000 600 employees in the world, amongst which 10,000 in France, that is to say progression of 1200 persons. We wish to continue to role play our role of a corporate good citizen where we operate, focused in the long term through actions to economic, Social, educational, but also cultural either directly or through our corporate foundation. In terms of education, our in house leather school has 80 trainers and collaborates with 10 leather training schools all over France.
We are particularly proud of start of the project called Centre of Training for Hermes Apprentices in partnership with the National Education to convey leather know how, learning Manufacto of the MSR Corporate Foundation has grown 1400 students, 55 schools. This was in 2020. 2020 also, We pursued gender equality with an index higher to 90%. Maintain a diversity of persons and talents is the foundation of the Richness and creativity of Hermes. Hermes ranks 5th in the ranking of diversity leader published by the British Daily Financial Times and 1st in its sector.
Hermes is the head in its ranking as by Capital Magazine Amongst the 500 best employees in France, testify to the experience of the employees and The perception of the group. We want to keep this commitment and continue to recruit people with disabilities. We are continuing our strong compensation policy Without government subsidies, profit sharing has been maintained at high levels. With 51 production sites in 9 regions of France, we are a committed local player with the creation of jobs, we've said, and the development of training centers. These dynamic activity hubs contribute to the vitality of territories and their activity regions of activities.
We pursue also the securing of our supplies with the aim of preserving unique know how. We are committed with our suppliers and partners In long term approach, in order to make the approaches around climate and biodiversity to progress and our approach as we collaborate with WWF and University of Cambridge. The growth model of Hermes above all inspired by the values of Craftsmanship, naturally close to the challenges of preservation of natural ecosystems. Hermes has always offered repair services for its objects, more than 120,000 repairs and aftersales have been carried out. Producing objects that you do not throw Is producing with little in optimizing raw material.
Vertical integration of our model allows us to have a better control over the production process, The design and the delivery of products. In this framework, within each of our metiers, we are looking at how to go further in the recycling of our materials, for example, in packaging And with Patitash, we are also pursuing our strategy of donations to associations. We produce artisanally the objects of high quality thought to last with the supply, which is responsible, transparent and respectful of biodiversity. This goes through the reaffirmation of the requirements in terms of supplies that are responsible vis a vis all our suppliers to the sharing of good practices and accompanying of our partners as well as a Strict audit policy. In terms of carbon strategy, 2020 was an important year.
LMS has fixed us an objective reduction of emissions by 50% by 2,030 in absolute value and the reduction by 50% of the intensity in Scope 3. In a structural way, the group emits very low emitter of CO2. And on top of that, as Offsets 100 percent of its emissions related to its own activities. In 2020, we've been committed with the Fund Carbon livelihoods, a project with positive impact on climate change with the reforestation as a major In 2020, we've strengthened our commitments with regard to biodiversity. Accompanied by WWF and CDC Climate, we are doing a mapping of the impact of the Global Biodiversity Score.
Our commitments are materialized also through our participation in collective initiatives with enhanced transparency, just like our commitment to TCFD. These efforts are reflected in the progression of several of extra financial rating System Analytics at the CDP Agency. Henceforth, 10% of the variable compensation of managers is subjected to meeting on CSR criteria. We are convinced of the importance of collective intelligence of the sharing good practices and a common effort to face up to the key I'd now like to give the floor to Erik Dahlguez, CFO, who will present the annual results. Thank you, Eric.
Good morning, everyone. Air Max achieved strong results in 2020, a year that saw A health and economic crisis. This strength is reflected both in our results as well as in our cash low generation, in spite of strong disturbances in production entities in France as well as distribution subsidiaries worldwide. Recurring operating profitability, which was 21% in the first half, improved significantly in the second half, thanks to recovery in sales, reaching 31% for the full year. Gross margin loses 0.6 points.
This slight decline is due to an under absorption of production costs in the first half in spite of a positive impact of Foreign exchange hedges. Remember, price increases in 2020 remained very limited, 1% group wide. Communications spending reaching €279,000,000 This is 4.4% of sales versus 5.2% in 2019. Yes, many events were canceled such as the Sault Hermes event in Paris or postponed like the launch of a new men's fragrance. Overheads, excluding fixed rental payments and guaranteed minimums, Remain almost stable between 2019 2020, reaching €1,400,000,000 The group maintained jobs and base Wages for employees worldwide.
Other income and expenses reaching €696,000,000 including the tune of €470,000,000 amortizations, half of which have to do with fixed and intangible assets. The other half being use rights that are amortized over the duration of leases. The increase versus 2019 is a reflection of ongoing Investment projects in the Distribution Network in Digital and Information Systems. Recurring operating income, Almost €2,000,000,000 representing 31 percent of sales versus 34% in 2019. After taking into account The nonrecurring profit of €91,000,000 due to the deconsolidation of Changxiao, recurring result is euros 2,000,000,000, which is 32 percent 32.4 percent of sales.
Financial income and expenses, an expense of €86,000,000 mainly three components here: Interest on lease debt, €30,000,000 expenses having to do with ForEx hedges such as option premiums and swaps, currency swaps. Lastly, income from cash investments. Corporate tax, 30.9 percent, down 2.2 points versus 2019, mainly due to the non Taxation of the proceeds from deconsolidation of Changxue, minus 1.5 points as well as a Favorable geography mix. After taking into account results of affiliates and minority interest, net income, EUR 1.385 €1,000,000 versus €1,528,000,000 in 2019, which is a drop limited to 9%. Net profitability in 2020 reaches 21.7 percent of sales, slightly below the level of last Annual average growth rate of net income over 10 years 12.6%.
The group continued its operating investments reaching €448,000,000 in 2020 versus €478,000,000 in 2019. Investments are up if we exclude the acquisition of the premises of the Sydney store in 2019. €195,000,000 were spent on the distribution network. Specifically, I'd mention The refurbishment and extension projects for the following stores: Savre in Paris Harbor City in Hong Kong Beijing, China World in China Tokyo Marinichi in Japan And the Wynn Plaza in Las Vegas, United States. €124,000,000 were spent on production investments, mainly in Leather Production and also in Silk and Textiles.
Lastly, €129,000,000 was spent in Real Estate as well as IT and Digital Projects. Inter Alia, I'd mentioned continued rollout of a digital platform in Asia. Operating investments should continue at a pace in 2021. In spite of the health and economic crisis, Cash flow reaches almost 2,000,000,000 yen which is a level similar to the level reached in 2019. Change in working capital requirements, The result is mainly due to replenishment of inventory in the distribution network, which is especially low at the end of 2019.
After taking into account operating investments we alluded to previously, available cash flow adjusted reaching almost €1,000,000,000 for the full year. Financial investments were mainly Spent on continuing our vertical integration projects, among others, I mentioned the acquisition of our long standing supplier, J3L, we used to be a minority stakeholder of theirs. After paying €490,000,000 in dividend, which is €4.55 per share, the exact same amount as that paid in 2019 and take into account €122,000,000 in share buybacks, Restated group cash flow up EUR 342,000,000 reaching over EUR 4,900,000,000 The group, all the while, maintained its strategic investments, protected its employees and created more than 700 jobs, It strengthened further its financial standing, enabling us to calmly move on to 2021. The dividend, which will be up for approval by the next AGM, euros 0.45 cents per share, which is the same amount as the dividend paid in 2020.
Thank you very much, Eric. I now come to the outlook of the group unchanged. For 2021, the impact of the epidemic of COVID-nineteen remained difficult to By the economic, geopolitical and monetary uncertainties in the world, the group confirms an ambitious progression of its revenue at constant rates. Thanks to its unique corporate model, Hermes pursued a strategy of development in the long term with a model which is artisanal, Sustainable growth and responsible founded on creativity and the control of transmission of know how and requirement of quality. Each year, theme defined by Pierre Alexis Dumas, the Artistic Director of Hermes, is the guiding thread in our creation and communication.
2021 will be placed under the sign of the Odyssey. It is therefore a question for us to continue our travel with trust confronting the uncertainties of the world but without losing our identity. We are confident in the solidity of our model agile and dynamic in the face of a reality which is changing. We are pursuing our strategic investments in new production capacities in France with the creation of new jobs and a special emphasis on training and transmission. We continue in pursuing our omnichannel strategy in order to remain in sync with the new users in constant evolution With opening extension of several stores such as the Rue De Sevres in Paris, Omotesando in Japan, Beijing, China and Detroit in the U.
S. A. And the pursuit of the rolling out of the e commerce platform. The strategic investments are planned also in R and D for new exceptional raw materials to enrich our offer with the responsibility the approach of responsibility. This year, faithful to the mid tier of Creator, we will be unveiling new collections with the launch of H24, a new men's fragrance signed by Christine Nagel.
We will be presenting H08 Men's Watch. Finally, it is a pleasure for us to receive Steve Gaudart, number 1 worldwide for the show jumping partner, HorseRider. The profound changes in this uncertain Well, we remain confident. I would like to thank each of the employees of Hermes who work every day to make this house grow. We are now available to answer to your questions.
Morgan Stanley. Good morning, Axel and Erik. Two questions for me. I'll be disciplined. The first one is on the current client selling much evoked in the luxury sector.
Can you tell us about your efforts in 2020 And how you've been able to make the most of the wish list that you have with the customers, First question. 2nd question for Erik. In the second half of twenty twenty, the operational margin was 37%, which is the highest Level in the history of the group to my knowledge, 400 basis points. Why in 2021, the operational margin The whole year would not be at least equal to the one that you had obtained in 2019, which was 34%. Thank you very much.
And
I'll start with the most difficult question, Probably client selling. Well, we are not a house of marketing, as I often say. And in fact, I'm not even sure I understand I don't even understand the concept of clienteling. What have we done in the course of the year? Well, first of all, we opened when we could with Pleasure our stores to the customers who came in large numbers to Come and enjoy the experience in the stores, and we had a very good activity in France around Christmas and holiday period.
And then in a more complex situation with health Related restrictions, we received our customers upon their request, either by telephone with events. The success of this year were achieved, I would say, through the normal framework of our Operations, we adapted, we were agile, we tried to find new ways of doing, but there was no changes in our relations with our Clientele, whatever be the situation. And I think this loyalty on both sides is part of the success and the attachment that we mutually have with our customers.
To talk to you about margin level in the second half. The strong recovery is the combination of several points. Firstly, as we mentioned, recovery in retail sales generating consolidated margin, very positive mix in the group's P and L. The second one It's due to inventory sales, particularly good sell through. Next, cost containment, cost control.
Temporarily, we froze hiring except for production capacity hiring and store openings hiring. Lastly, Positive ForEx impact, I mentioned this previously. Regarding the margin rate 2021, As you know, we're strongly dependent on activity levels. It's early days now to make any announcement as to a target. Okay.
Thank you. I think
on that particular point, We can't craft a financial model here, but let me just say that Hermes, as we demonstrated this year, is a company with lots of fixed costs. We produce a lot in House, particularly when you're thinking of various production locations. So when there's a difficulty, fixed costs are there. They're a large proportion of our revenue. If we go beyond objectives, there's a leverage effect.
At this juncture, it's too early to say we'll be above, below or what have you. That's why there can be variations at Hermes from 1 year to the next. The direction is the right one though. We're heading in the right direction. Thank you.
We have a question from Luca, Tamsted Research, you have the floor. Good morning, gentlemen. Thank you very much indeed to I have a question for Widgakato Shanks here. You've deconsolidated this And this activity this year. What are the lessons that you actually draw from this experience outside of the Hermes brand?
The criteria, the know how that you have In the house, can it be applied efficiently to other brands or not? The second question is related to your focus on organic growth. You have a very high Amount of net cash in your accounts. And I was wondering whether you could Confirm your focus on organic growth or whether you have any ambitions beyond that. Thank you, Luca.
The two questions are almost related. I would I'll give you a simple answer. Hermes by tradition has always and this was the vision of Jean Louis Dumas I wanted to be the tribe of know how, that is to say, take under its wings, companies, The know how of which were important and in our group, I'm thinking of Puiforca on flatware, Salween, crystal And so we created with Changsha based on know how this company. And today, for its development, I think it needed An impetus with other shareholders, it's found. And we deconsolidated Changxiao because we are now we have a minority share.
The role and our strategic role is to use organic growth. We have a lot ahead of us. And as you've seen, the strong progression of the Metiers that everybody is not talking about Jewelry this year, tableware, the house, the home department, and we really believe in the potential of organic growth in Hermes It's a reasoned manner. And nothing is excluded, but it is not our global strategy. Thank you, Luca.
Thank you very much.
Thank you. Now we have a question from Thomas Cheniere from Citi. Go ahead. Mr. Chauvet, you have the floor.
This is Thomas Chauvet from Citi. I have a first question. Hermes business model isn't based on radical transformation, you've often said this, based on continuity. But the shock due to the pandemic was quite violent in the sector. We saw changes in consumption patterns and so forth.
XL, what are the main lessons you would draw from this crisis, which is still underway terms of products, distribution, communication. Would there be a need to adjust your business model possibly in some respects? Secondly, Your segment category, Luxury Jewelry, saw strong growth in the second half. What are the secrets of the success? Why is it happening now?
Could you also comment on profitability of those 2 categories versus Groupwide. Next, a follow-up on the first question asked by Edouard on profitability in the second half, which was very high. Maybe this is for Eric. In 2021 and beyond, might there be a change in cost structure at Hermes, Fixed costs versus variable costs, wage base, rent payments or other items That might in the longer run lead to slightly greater structural growth. Thank you.
Yes, I'll answer the first question. I believe it's too early to really see any possible structural changes. We're in the midst of that storm now. I'd also like to say Everybody is acting during a crisis as best they see fit. The real difference, I think, is how well prepared you were to enter the pre crisis, which you've done previously.
Major structural changes that we're perceiving are changes that were already underway previously or at least we realized this. We're seeing Asia economically predominant. This was further strengthened during the crisis, and we're seeing how important digital things have become. This is the main two items. We were already prepared here.
We were able to contend with the growth, absorb it using our systems. Plus, Something else that we've repeated for quite some time now, I talk about the importance of local customers. You often heard me talk about this during my presentations. And what do we see here during the crisis with less traveling and so forth? We saw further uptick in local customers.
We were already working on that basis with that rationale. Therefore, I believe our position was pretty strong in this respect. Therefore, the changes we're seeing now We're speeded up during this time, but they'd already been in the way. We'd already known this in a previous time. Next, of course, there are other events.
There are always external events that may well be temporary. We had a good strategy in Travel Retail. Travel Retail has been very much impacted by the drop in traveling. This will take some time probably. But since we've got a good balance, we can absorb this.
This isn't a concern. This has always been our intention at Air Mass, to be highly optimistic, but all the while getting ready for possible crisis. You can't predict and prevent crises necessarily since the beginning of 21st century. There was September 11 in the U. S, there was Fukushima in Japan.
There was SARS in Hong Kong, terrorist attacks in several countries. Currently, there's the COVID crisis. So crises do happen. You have to be prepared for them. You can't know what they're going to be in advance.
You don't know where they're going to be. You can't predict One like this is so global and so strong, but you have to be ready for a crisis. That, I believe, is our strength at Hermes. We think ahead to the future, and we also try to ensure our resilience during tough times. Probably, that's the point.
As to jewelry, let me say that we're all very proud. It's an ongoing endeavor For many years now, this is a M. A. I'm very attached to personally. I started some of my career at MS at Jewelry.
I think that we've managed to put together a very original offering. We stand out. We're very different from the rest of the industry. This is highly desirable in the eyes of our customers. I'd remind you, initially, we relaunched Jewelry, Jean Dumas appointed as our Assistant Director for Jewelry, Pierre Hardy, who was designing our shoes.
He'd never designed jewelry previously. Why did you do it this way? Because we didn't want to do it like everybody else did things. Sometimes people forget. We How about doing this differently?
We have our own style. We have our own creation. That's what's at the core of who we are at MS, 1st and foremost. Over the years, it's been after all at least 15 years now that we've been working on this. So Jorby Hermes is much longer standing than that, of course, back in the 1930s.
And I'm still a top seller of ours, the chandoncra silver bracelet. But this incredible dynamic process we've been seeing Also, thanks to the beauty, originality of our products that you won't find anywhere else, there was a Due to change shift to gold and high jewelry, we were very famous for silver in the past. Over about 20 years, we've managed also become very famous in gold jewelry and high jewelry, which has been extremely successful this year. Now in a time of crisis, We'll think of the strength of metal. I'm sure it's had an impact.
These are products that people find reassuring. Yes? I'll let Henrique answer on the profitability point. We don't have a target to maximize profitability at all cost. Our objective is to do things right, invest where we need to invest, I.
E, in our production network, in our stores and in digital projects and then reap the benefits. It's important to do this together with all of our employees worldwide in all of our different structures. So but that's not our main item we focus on in managing the group. Yes, to comment on what Axel was saying there's no big changes in our cost structure. First of all, you have everything pertaining to production capacity, I.
E, cost of craftsmen and women, Production expenses that go up as we open leather production sites. Then you have commercial and sales expenses, which vary as Stores open and or are enlarged. The only variable portion is our variable rent payments making up around €250,000,000 mainly in Asia. And then lastly, amortizations, which are fixed and go up as we invest in digital projects and IT projects.
Thank you. We have a question from David Dabfayev from CIC. Good morning. A question on the volumes of production in the leather. In 2020, your sales With very limited price effect and so I guess that the volumes were quite close to the drop of 5% in Your inventory increased quite a lot in 2019.
Can you tell us whether the production volumes continue to progress in 2020 Despite the closure of your workshops for some weeks and the productivity, which I guess was impacted due to the health Measures, you've come back to a double digit figure in 2021 if demand is there as it was in the Q4 of 2020, first question. 2nd question on The beginning of the year beginning of the year is difficult to read because of the Chinese New Year and the impact of the pandemic in China last year in February. But can you tell us some indications on possible changes in trends that may be there in some markets as compared to last end of the year, last year. Well, concerning production of For leather, it was highly impacted by the decision that we took to close for 1 month. During the first lockdown, our production workshops for the security of everybody.
During the first lockdown, we saw some nervousness, and we wished for everybody to stay home to break the chain of the transmission of the virus. Resuming production is more complicated than stopping it. So quite obviously, this year, we did not have productivity rates Normative productivity rates, they've progressed well, but I can't say that we are in a normal of things currently and you've seen with the evolution of the pandemic and differently, in fact, in the different regions of France because We create manufacturing units of 250 to 300 artisans per manufacturing unit. And so we are quite Well disseminated on the territory, so we can have situations that are quite different depending on the region in which we are present. Now you have seen the significant growth of Leather in the 4th quarter.
So the desirability of our products is there. Production should be The ups and downs of the French situation because 100% of our leather goods are made in France, it's a strength, But it can also be a drawback in a complex situation. So we have all the reasons to continue in this direction in In 2021, it's quite difficult with the 2020, which was so not normal to position oneself on growth rates as of now. There are So many factors involved. And in fact, what do we see in the beginning of the year?
You summed up Well, what I think every time that it's very difficult to actually give you the figures of the Q1. There's a trend in the Q1 before We end of the month of March with the changes in the date of the Chinese New Year, which is much earlier in 2019 and less early in 2021. And if I were to sum up The situation to give you an answer, I don't see any downward trend in Asia and for the rest of the world, knowing, of course, that some stores that are closed in the world and still are either it's Travel Retail or some in Europe. Some European countries have closed their stores, which is not the case for France. So it does have an impact.
But in A macro manner, there is no sort of break in the trend, no significant break in the trend. Of course, that doesn't mean one has Extrapolate on the Q4.
I wanted to As Axel said for Leather, we keep our medium term objective to Increased our capacity by approximately 7% per year. Okay. So we now have a question from Susanna Pouche from UBS. Madam, the floor is yours.
The December was impacted by some incremental lockdown. So I was just curious if you could comment on what was the performance month on month? I mean, was More or less what you've seen in the quarter on average or did December see higher lower exit rate? That would be very helpful. Question is on pricing.
Would you be able to tell us what is expected pricing contribution in 2021, especially Given that last year some of your peers increased prices by often double digit amounts. So I'm just wondering If you would maybe try to benchmark yourself against them and see higher price increases this year. And the last question is E commerce, would you be able to tell us what was e commerce as a percentage of your sales in 2020? Thank you very much.
On your first question having to do with Q4 performance, Trends in October were slightly stronger but relatively balanced over the 3 month period of Q4.
Pricing. As you know, and it's very important for Hermes, we don't have A strategy of marketing with pricing, mostly because we don't do marketing. So our pricing Reflect the increase of the cost of goods, which is mainly the increase of our Salaries and the new creation of workshop, which is to say It was around 1% in 2020. And for next year, we forecast a little bit above that, around above 1%, but not that much. It depends also of the currency in the different country.
So we are not when I answered to Luca that we were focused on organic growth. That's been also organic growth within ourselves, which means mainly through our own store and not by a price increase. All our price are done through the cost of goods and not for other reason. For e commerce, how are you? I like this question because it's something I'm very keen on, and I've been doing that for a few years.
I never give any objective internally of percentage of sales. I think it's very important to that we think in term of omnichannels. And if you are really an omnichannel company, You are not looking at how much I do in store, how much I do in e commerce. You try to have the best channel on every kind and let the client decide Where he want to buy. And you never know what happens.
Sometimes he's looking in the store and then buying on the Internet. Sometimes he's looking in the Internet and buying on the store. Thanks, looking in the Internet and buying in the Internet, who knows? And we just remain to be open on that. What we have seen is that we have a very strong increase of our e commerce sales during this year, above with 3 digit.
But I don't think that the percentage of sales is such relevant. I will still give you one figure is that When, for example, in France, all the store were closed, we made 100% of our sales with digital.
Thank you. Our next question from Antoine Rieu from the Societe Generale. Go ahead. Good morning. I'm from Sustige Generale.
I've got two questions. Firstly, Communications Spending, my question. Is your 2021 target as a percentage of sales historically used to be around 5% or slightly Greater, in 2019. I was wondering, is your 2021 target to slightly increase that, possibly with a greater push in the area of beauty. Next question, taxes.
Corporate tax rates in France, down to 27.5% this year. I was wondering what's your expected the expected impact on Hermes' tax rate knowing that a lot of activities in France. Follow-up question. There's also a drop in production tax In France, we know you produce a great deal in France. My question, will there be an expected margin effect?
If so, could you give us a figure on that for 2021? Thank you. I'll answer your question on communication. Compared to others in the industry, Air Mass has a communication budget. I don't want to overgeneralize, but our communication budget is fairly different.
It's usually 2 3rds on Events. We have a very strong relationship with our customers through Events. And then onethree is in Media spend. To oversimplify, I'd say in industry, it's usually 2 thirds media and 1 third events elsewhere in industry. So without events in 20 'twenty was complicated.
It wasn't to manage costs. Our communication budget for 2020 entailed lots of events that were canceled. We weren't able to organize our floor in China, in the United States, in France. We're very unhappy to not be able to organize the So Hermes jumping event in Paris at the Grand Palais for health reasons, we won't be able to organize it either in 2021. So it wasn't really designed opportunistically to try to Improve net earnings.
We always have our objectives basically of Communication spending remaining stable over years. You mentioned this as a percentage of sales. Expect this, yes. We'd like to do some events. There are some uncertainties as to whether or not we will indeed be able to organize These are the events.
We've positioned most of them for the second half of the year, so they become more likely to actually I'll come to fruition, but it will all depend on other circumstances. In 2020, we were able to redistribute some of that budget allocated. We're always on the offensive, making investments in digital communication, and we're also able to earmark a little bit more for the media than usual, able to bolster our sector, which is also affected by the situation. So that's on the communication point. Yes, on to your question on tax rates.
The tax rate should go down by around 1 point If we take into account the drop in corporate tax in France, the impact is positive in terms of geography, reaching around 30% normative. Yes, we saw the benefits of the TVAE. Impact is not highly significant group wide though, it's production tax, but we will be benefiting starting from this starting from 2021. So we now have a question from Bettis Gini from JPMorgan. Madam, you can go ahead.
Good morning. Thank you for taking my questions. The first one would be, If you could provide any comment on the European consumer, in the European domestic consumer during Q4 and maybe through 2020, what you've seen there? And also if you could remind us please how much tourists contribute to European sales in a normal year? And Yes, that's my question.
Thank you.
Thank you very much. Well, We've always been very focused on local client and this In every country. And that's why, for example, I will take an example. In Japan, We have a very strong Japanese clientele despite the tourists, and that's why you see the good result. I would say Korea.
There is a lot of tourists in Korea coming from other country, but we have a very strong base and loyal fan base of Korean client. It's always been important for me that when we are in a country, it's mainly and 4 and foremost for the local client. So that was already a little bit embed within Hermes. And that was very much the case in the European country where we have a long standing, I will say relationship with all the client in all the European countries. If you take, for example, I'm sure as analysts, you like quantitative.
The number of store Hermes got in France, it's much more than the rest of the industry because It's very important for us to have a direct link with our client, and we believe that we want to be relevant in each of our country for the local client. We are quite relevant in Italy too, in Germany. After, it's difficult and to have, I will say, a portion of the sale because it really depends on the tourist attraction of the country itself. We say we have more tourists in Italy than we had in Germany and than we had in Sweden. So it's really depending, but it's always very important and especially in the qualitative objective that I gave to all our President of Country, that the local clientele is there.
What we have seen in this country, In Europe, is that, 1st of all, they embrace very strongly digital from day 1. I will say that the growth of digital, even in Europe where we are present, have been very strong. The second thing is that Christmas has been important for our European client. I would say that, that's the beauty of the tourists is that they all around the year. But when there is important event like Christmas in Europe, We have seen a very strong commitment of our client to Armisto and to the fact.
So it was Quite early. So that's why we had a good December in Europe because of that. We have a last question.
Yes. We have Question from Loic Morbon, Garnier. Good morning, Loic Morbon, Brains, Garnier. I have two questions. First on the role of Asia.
If you put your counter to the 4th, 3rd quarter of 47%. Have you performed better in some areas than other, some regions than other? Can you come back a little bit more on your program for the opening of stores and the renovation of stores in 2021? Thank you. Right.
So on the Asian zone, the figure is quite Hi. I agree and that's a good thing, I would say. It's the whole zone that has progressed that is Really quite important in the 4th quarter. To just to sum up, I I would say it's all the countries. Korea, very strong.
It's been years That courier has been growing in this way. Australia has Well done very well. We have a new store in Sydney, which I mean, the store that was enlarged. Thailand, Strong progression and China, of course, has progressed a great deal. If I were to tone some things down, I would say I mean, because there's almost no travel Although Inter Asia travel is growing a little more than Asia Europe, the zones that were most open to travel, be it Hong Kong or Singapore, suffered a little more.
But globally, you see Paul suffered a little more. But globally, you see that every time in each country, we had a local customer base, very strong local customer base It helped us and the acceleration of strong sales in each of the countries concerned. But it's very widespread in all of the region. On the opening, as you know, our network is quite stable. Bigger stores, not necessarily in greater numbers, but bigger stores in order to better be able to present all of our Metiers departments.
And so this year, we had great success in Sydney and Australia. I mentioned it. So it allowed us to have a bigger store and to better present our ready to wear men's and women's shoes and jewelry and have to present the Home Department. And maybe because people spent a lot of time at home, the Home Department witnessed Considerable growth. So we need more space in our stores.
In 2021, There are big renovations and enlargements of our stores in the strategy. I mentioned the Sevres store, which will be reopening, Lyon's store. And in Europe, we're going to be reopening in Harrods. Enlargement of Milan is planned, which is a bit small with regard to our success. And we'll be re enlarging our Stores in California, in the U.
S. A, Sutro Plaza, and we're continuing in Asia, In particular, project in Beijing and China World, which will be very important. And in Tokyo, we will be Continuing to enlarge, our Senjukko is a tonne store, which is a true success. And some openings as well, some new stores in order in a limited way, we'll be opening in Detroit in the U. S.
A. We'll be opening a new store in Shenzhen, where we already have a store. And we'll be opening also in Tokyo in the Mote Sondou district where we were not present and in which we made a project a few years ago That should open in the weeks to come. So there you are. So we keep Our global strategy and the year 2020 confirms the strategic thrusts of Hermes.
They've been accelerated in a way as a result of this unusual situation. And I think you have to remain very humble in the face of the situation. And I think this is a quality that we have in Hermes where the artisan has to get to work and one has to be as good as he was the day before. So we remain confident in the future because we believe that the major The changes, evolutions that we see today confirm the strategic choices, the values that are present in Hermes for A long time. So thank you very much.
This conclusion has created some new questions. So one last question to finish.
Yes. We have a question from Ash Yes. Thank you for taking these last two questions. There'll be quick questions. I wanted to come back to The plans for launching new products, non leather products for 2021.
Could you come back to brief us on that? Next question. I was wondering about further points on this year. Thank you. Yes.
We will be continuing With our customary launches, the Home Department and so forth, we'll continue investing in beauty products. There should be an increase in our beauty product ranges, thanks to our successes. There'll be a new men's fragrance, H24, a new men's watch we launched. H08, which I think is particularly successful. I may not be objective.
And then Hermes is all about design and creation. Every 6 months, We renew all of our ties collection, all of our silk collection with new models and so forth. We'll continue this In spite of the crisis, we'll be having a digital podium where we present All new items to over 300 of our stores. All the stores decide on their own product assortment, which means The various stores do not have the same product offering at all. Our production is very much artisanal so that we can provide This wealth of product offerings, we have many novelties in store, very interesting products, new products in every single metier.
There are also new leather items, very exciting. We're very enthusiastic about the upcoming weeks and the launches. It's very important. Might I clarify a point that might not have been fully clear? During these times of crisis, these are difficult times for everyone.
It's very important during these difficult times to maintain our company's creative ability, Our ability to design things that are beautiful, do not just Reduce collections or set aside lower and wait for the storm to go by. No, this is precisely the time to Keep things going. Keep that light on like in a theater. You never turn off all the lights in a theater. So This is one of the challenges in 2020 2021 is to keep this intensity going, keep it up Keep our relevance at our creativity.
Yes, on that point, our operating investments should grow. In 2021, OpEx up by around EUR 450,000,000 to EUR 500,000,000 as we indicated earlier. There you have it. Thank you very much for taking part. Thank you very much for those questions.
Of course, We, as I imagine you, are somewhat frustrated to not be able to meet together in this room where we're used to meeting with you. We hope in the very near future, We will be able to meet again in this room. We would say, as we always do at MS, we're highly optimistic and keeping a careful eye on things moving into this year. We're very confident in the future, and we're also paying very close attention to possible pitfalls that may be out there. Thank you very much.
Wish you a great
day.