Hermes open to investing in Italian fashion and shoe suppliers

Hermes could invest in Italian fashion and shoe subcontractors that it already works with, further integrating its supply chains, the company’s finance chief said on Tuesday.

“We could consider vertical integration with investments to consolidate partnerships with some suppliers that share our standards,” such as quality, said Eric du Halgouet, Hermes’ executive vice president finance, speaking on a call with analysts.

French luxury groups, which have been growing rapidly in recent years, have been tightening their hold on production with Kering and LVMH reinforcing eyewear activities, for example. Fashion groups in Italy, which for decades jealously guarded their independence, have meanwhile begun joining forces to protect local supply chains.

While most of Hermes’ production sites are located in France, and well-integrated into the company, certain Italian suppliers have specific expertise in shoes and clothing the company could lean on for reinforcement, Du Halgouet said. He added that could take the form of minority or majority investments or the addition of a specific site dedicated to Hermes products.

Hermes, which carefully manages leather goods production, adding workshops in France at a gradual pace, does not see any capacity constraints in the coming years, the executive said.