Hermès has one last boutique left in Moscow

Hermès did not renew the lease of the store in the Vremena Goda complex and the office in Nizhny Kiselny Lane. Now the creator of the legendary Birkin and Kelly bags has only one boutique left in the capital - in Stoleshnikov Lane. Hermès boutique in Stoleshnikov Lane, Moscow

The French fashion house Hermès, which temporarily suspended operations of its boutiques in RUSSIA three years ago, has not renewed its lease agreement with the luxury shopping center Vremena Goda. This is stated in the appendix to the financial statements of its Russian subsidiary (Hermes Rus) for 2024 .

it also follows from it that the company occupied premises with a total area of ​​450 sq. m. in the complex on Kutuzovsky Prospekt. Initially, the lease agreement with the owner of Vremena Goda was valid until September 30, 2035. But, judging by the documents, this period was subsequently shortened to the end of November last year. "In 2024, Ermes Rus decided to close the division and terminate the lease agreement," it emphasizes there. The rental rate for these premises could be from 15 thousand rubles per 1 sq. m. per month, says one of the consultants in the retail real estate market.

The Hermès boutique in the complex on Kutuzovsky Prospekt opened in 2020. Its design was carried out by the French architectural bureau RDAI, which the fashion house had previously engaged to open its own space in Paris. In particular, the Hermès Ex-Libris motif was used in the decoration of the Moscow store, which is reminiscent of the interiors of the company's famous boutique on Rue du Faubourg Saint-Honoré in the capital of France. It offered women's and men's clothing, as well as bags, jewelry, watches , furniture and home goods, cosmetics and perfumes.

But on March 5, 2022, the subsidiary of the French fashion house, in connection with the start of a special military operation in Ukraine , suspended its operations in Russia, temporarily closed its stores in Moscow and indefinitely postponed the opening of the completed boutique in St. Petersburg. The fourth package of anti-Russian EU sanctions , adopted shortly thereafter, banned the EXPORT of luxury goods worth more than €300 to Russia. This made the operational activities of Hermes Rus in Russia impossible and forced it to completely stop importing goods, the company's reporting states.

The French office of Hermès and Vremena Goda did not respond to RBC’s inquiries.

What is Hermès famous for?

One of the oldest French fashion houses is also known for its Birkin bags. According to Knight Frank, they became the most attractive luxury item for investment in 2019, demonstrating an annual price increase of 13%. At the end of 2024, this consulting company also conducted a study in which it noted: “An absolute classic, the Birkin bag in black Togo leather, is now more valuable than ever when sold on the secondary market.”

In addition to bags, Hermès is also known for its scarves and hats. In addition, the fashion house produces clothing, perfumes and cosmetics, home goods, equestrian goods and others. The main owner of the company is the Hermès family, a minority share is also held by the transnational company LVMH of Bernard Arnault, the world's largest manufacturer of luxury goods.

What other objects has Hermès abandoned?

The accounting reports state that last year the French company also decided to give up office space in Moscow. We are talking about 289 square meters, which it occupied in a business center on Nizhny Kiselny Lane near the Trubnaya metro station. The lease agreement was due to expire in November-December 2024, the document states. RBC was unable to contact the owner of the property.

The rate paid by Hermès at the time of the agreement termination was most likely at the level of 40 thousand rubles per 1 sq. m per year, says Ekaterina Belova, HEAD of the office premises department at IBC Real Estate. She recalls that foreign companies signed long-term lease agreements, and accordingly, the company agreed on such a payment amount three to five years ago. In the current situation, such premises can be rented out at a rate of 50-60 thousand rubles per 1 sq. m per year (excluding VAT) and even higher, believes the RBC interlocutor.

In addition to the areas on Kutuzovsky Prospekt and Nizhny Kiselny Lane, the French fashion house also left GUM a year earlier. The boutique on Red Square near Hermès had been operating since 2007 and was gradually expanding - at the time of the contract termination, it occupied about 1.3 thousand square meters. Now these areas are rented by the Russian clothing brand 12 Storeez.

How much did Hermès earn in Russia?

A year before the start of the pandemic, Hermès' business in Russia brought in about RUB 2.7 billion in revenue and RUB 318.6 million in net profit, according to the available financial statements of Hermès Rus. Measures to combatcovid-19 , which were introduced around the world in 2020 and affected international tourism, trade and logistics, did not have a negative impact on the company's revenue in the Russian market. Hermes Rus' revenue in 2020 increased by 25.8% compared to the previous year (to RUB 3.3 billion). And in 2021, revenue growth in annual terms amounted to 56%, to RUB 5.2 billion, the company's net profit exceeded RUB 1 billion.

In 2022, after the decision to suspend the work of Hermès stores in Russia, financial indicators expectedly began to decline. Hermes Rus' revenue for that year fell by 70.6%, to 1.5 billion rubles, the company received a loss of 86.7 million rubles.

According to the results of the latest reporting period for 2024, the turnover of Hermes Rus fell by 50% compared to the previous year - from 47.5 million to 23.7 million rubles. Net loss during this time decreased from 1.8 billion to 516.7 million rubles. Short-term accounts payable of the Russian subsidiary of the French brand amounted to 83.5 million rubles against 81.1 million a year earlier.

What objects does the fashion house retain?

In Moscow, Hermès has only kept its boutique on Stoleshnikov Lane: the lease agreement for it will be valid until the end of November 2026. Here, the brand occupies 671 sq. m, of which 572 sq. m are retail space. The issue of its leasing by other players is not being considered yet, says an RBC source in the retail real estate market. In general, Stoleshnikov Lane continues to be in demand among retailers in the fashion and jewelry segments, recalls Irina Kozina, DIRECTOR of street retail at NF Group.

In addition, the company continues to rent space in St. Petersburg. We are talking about a 501 sq. m. space located at 153 Nevsky Prospekt. Hermès agreed to rent this property back in 2021, Kommersant newspaper reported. The agreement between the parties will be valid until June 2026, according to the accounting reports.

What's Happening to Foreign Luxury in Russia

After the start of the special military operation in Ukraine, the largest international companies specializing in the production and sale of luxury goods suspended operations in Russia. The French fashion house Hermès closed its boutiques, then the LVMH concern (its brands include Louis Vuitton, Dior, Loro Piana, Givenchy, Céline, Loewe, Bvlgari, Tiffany & Co and others) and Chanel joined in, as well as the Kering group (Gucci, Bottega Veneta, Alexander McQueen, Saint Laurent and others) and the Swiss watch house Richemont.

Restrictions on the supply of luxury goods to Russia were also included in the list of broad economic sanctions imposed by Western countries in response to the special military operation in Ukraine. In March 2022, the EU banned the import of clothing, shoes, bags, jewelry, watches and other luxury items worth more than €300 per item to Russia; the US also introduced a similar ban (at first, the threshold for the cost of goods was more than $1,000 per item, but then it was reduced to $300).

After the departure of international brands, their place was gradually taken by other companies. For example, in April 2023, in GUM, in place of the Louis Vuitton boutique, whose contract had expired, a store of the Dynamo football club opened. At the same place, at the end of 2024, the former Chanel premises were rented by the Khokhloma × Alena Akhmadullina salon. And the Fendi boutique on Stoleshnikov Lane was rented by the household appliance manufacturer Bork.

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