Axel Dumas
Sixth-generation CEO and artistic director of Hermès, leading the family firm founded by Thierry Hermès in 1837
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Axel Dumas is the sixth-generation CEO of Hermès, a family firm founded in 1837, who apprenticed in its workshops as a teenager and returned from investment banking to help defend and scale it. The lesson he embodies is that strategy means picking your fight: Hermès grows only as fast as it can train artisans, and that self-imposed limit is what makes the brand.
If you have more than 300 it is not a workshop it's a factory.
Hermès
Axel Dumas: the story and the lessons
1How Axel Dumas grew up inside Hermès
Dumas apprenticed in the Hermès workshop for five years as a teenager. He and his cousin Pierre-Alexis Dumas each learned the saddle stitch and made bags by hand before taking on leadership roles.
The saddle stitch uses one thread and two needles passed in opposite directions, so a torn stitch costs one stitch and the seam never unravels.
He learned the business at the family dinner table. Dumas describes growing up talking shop with his uncle Jean-Louis Dumas, who ran Hermès, and his mother, the head of production.
The family's argument is that succession works through absorbed know-how, not a magic bloodline. Each generational handover has rallied the company.
As an intern in 1988 he saw a scarf company, not a bag company. When Dumas interned in 1988, silk was 55% of sales and leather 9%. Today leather is 43% and silk and textiles 7%.
Dumas left investment banking in 2003 and paid his dues inside. He returned to Hermès in 2003, worked in finance and then jewelry, and ran the leather goods division from 2008.
Patrick Thomas became the first non-family CEO in 2006, and Pierre-Alexis took the artistic role. Until this generation, the creative and business roles had always been held by one person.
2The family firm Axel Dumas inherited
Thierry Hermès, an orphan, founded the firm as a harness maker in 1837. Born in 1801 in Krefeld, he lost his family to war, disease and famine, apprenticed 16 years in Normandy and opened in Paris in 1837.
Napoleon III's rebuilt Paris put carriages on public display, and status could now be bought, which gave him customers.
Émile Hermès bet the company on the car after meeting Henry Ford. After studying US industry in 1916, he bought out his cautious brother in 1919 and moved into handbags in 1925, clothing in 1925, jewelry in 1927 and watches in 1928.
He asked his craftsmen: "What can we make with our hands that will interest our clients today." He also licensed the zipper, known in France as the Hermès fastener.
Robert Dumas added art, humor and the brand's symbols. He launched silk scarves in 1937, took the carriage logo from a painting, and adopted orange boxes because of a wartime shortage.
He hired theater set designers for the windows to sell a dream. Bundling an unmeasurable feeling with a useful object takes the product out of feature comparisons.
Jean-Louis Dumas refused consultants and made old products young again. Around 1977 consultants urged outsourcing and cheaper goods. He kept the craft, ran 1979 ads of young women wearing scarves with jeans, and grew revenue about 40 times to roughly $2 billion by 2006.
He designed the Birkin for Jane Birkin on a flight, launched in 1984, and it took about five years to catch on. Hermès has kept a no-consultants policy since.
Late in Jean-Louis's era Hermès drifted from its discipline. It took a stake of about 35% in Leica, created the Chinese brand Shang Xia in 2009, and made a $150 canvas beach bag for Japan.
Leica was divested and Shang Xia sold to the Agnelli family. Supplier stakes like John Lobb and a watch-movement maker were kept as strategic.
3How the Dumas family beat Bernard Arnault
Arnault built a hidden stake in Hermès for nearly a decade. From 2001 LVMH bought through equity swaps, starting at 4.9%, then disclosed 14.2% in October 2010 and reached 22.6% by December 2011.
Buying up the free float lifted the share price to tempt the 80-plus relatives, and fear of being the last seller made the pull stronger. The first non-family CEO made Hermès look vulnerable.
Over 50 relatives locked 50.2% of Hermès into H51. In 2011 the family put 50.2% of the shares into a holding company for at least 20 years, later renewed for another 10, into the mid 2040s.
Former Rothschild banker Julie Guerrand left her job to run H51. The Puech brothers stayed out but gave H51 a right of first refusal on roughly 10 to 15% of the company.
The 1993 listing created the opening Arnault used. More than 80 relatives held one illiquid asset, so the family listed in Paris in 1993, selling 19% and keeping 81%.
For most relatives their share was about 90% of their net worth.
The family stayed independent because it enjoys the work. LVMH was fined about 105 million euros in 2014, and Hermès's market cap rose about 16 times from 2010.
Staying true to identity mattered more to the family than a short-term gain from copying LVMH.
4How Axel Dumas scales handmade craft
Dumas caps every workshop at 250 to 300 artisans. Hermès grows by adding two to four small ateliers a year rather than building factories, and 31 now run.
Dumas's line: above 300, "it is not a workshop it's a factory." The approach scales horizontally, like adding data centers.
Hermès trains its own artisans because nobody else has any. When Dumas joined there were 250 craftsmen and two were hired a year. Today there are 7,000, with about 500 added yearly.
Schools sit in rural areas of high unemployment with 100% graduation, and a state-recognized degree opened in 2021. The average artisan is 30 and 80% are women.
Capacity grows about 7% a year, and scarcity follows. Training takes over two years and one artisan makes each Kelly, about 20 hours over a few weeks from 36 leather pieces.
About 120,000 Birkin and Kelly bags a year make up roughly 25 to 30% of revenue, and waiting lists form. Scarcity is "not the goal, that's the result."
Dumas keeps handwork only while it beats machines. In 2019 he said machines are non-negotiable once their quality beats hand stitching: "We are not a museum."
Saddle stitching is kept because it is the best method, not out of tradition.
Hermès keeps people for decades and repairs everything. Turnover is about 6%, only 4.5% voluntary, against 24% at LVMH. Fifteen repair shops mend 120,000 pieces a year.
Every item carries a blind stamp identifying its maker and year, and repairers sometimes get back bags they made.
5Axel Dumas's rules for strategy
Dumas says strategy means picking your fight. Citing Michael Porter, he argues every decision has a reverse effect and you must accept rivals will do some things better.
He is disappointed when his team says it does everything at once. Refusing fashion, outsourcing and scale follows from this.
Hermès prices below what buyers would pay. Prices rise about 7 to 8% a year on purpose, while revenue has grown 15% a year since 2013 and volume 7%.
A Birkin launched near $2,000 in 1984 and is roughly twice that in real terms. Restraint keeps Hermès from looking like the brand of $100,000 handbags.
Hermès runs marketing without a marketing department. Communication is 4.5% of revenue, two thirds of it events, against 12% at LVMH, and there are no celebrity endorsements.
Stars who buy at full price are a more authentic signal than a paid one, and Hermès avoids riding out their scandals.
Store managers choose their own stock. Twice a year each manager gets a budget to buy for local clients, carrying at least one item from each of 16 métiers.
No two stores match, which creates a treasure hunt. Company-owned stores rose from 56% in 2003 to 74%.
Hermès sells a bundle rivals cannot assemble. Exclusivity, service, craft, shopping experience and brand come together only at Hermès.
Louis Vuitton has brand and exclusivity without the craft, while independent makers have craft without brand or service.
6Hermès under Axel Dumas: results and tensions
Revenue has roughly tripled since Dumas took over. It went from about 3.5 to 4 billion euros in 2013 to 11.6 billion in 2022, with a 44% operating margin in the last twelve months.
Asia outside Japan is now 48% of sales, France 9%, and 80% of clients in China are under 40.
Money is no longer the constraint. Net income splits in thirds between dividend, capex and cash, and cash stands at $10 billion.
Growth is limited by craft training, market saturation and brand image.
The Apple Watch band tests the brand promise. Introduced to Jony Ive in 2015, Dumas calls the band an elegant contemporary object, but it is machine stitched and costs about $540.
Some relatives want a pure museum and others want to serve more customers. The band, perfume, airport stores and a website where 70% of buyers are new all point to the second view.
Hermès
Hermès shows how a family firm can stay independent for six generations by reinventing its products while never giving up craftsmanship, scarcity and control of its brand. The decision that makes it worth hearing is the family's 2011 lock-up of 50.2% of the company in H51 to beat Bernard Arnault's stealth takeover, followed by a push to scale handcrafted production to 7,000 artisans.
Dumas apprenticed in the Hermès workshop for five years as a teenager. He and his cousin Pierre-Alexis Dumas each learned the saddle stitch and made bags by hand before taking on leadership roles.
The saddle stitch uses one thread and two needles passed in opposite directions, so a torn stitch costs one stitch and the seam never unravels.
He learned the business at the family dinner table. Dumas describes growing up talking shop with his uncle Jean-Louis Dumas, who ran Hermès, and his mother, the head of production.
The family's argument is that succession works through absorbed know-how, not a magic bloodline. Each generational handover has rallied the company.
As an intern in 1988 he saw a scarf company, not a bag company. When Dumas interned in 1988, silk was 55% of sales and leather 9%. Today leather is 43% and silk and textiles 7%.
Dumas left investment banking in 2003 and paid his dues inside. He returned to Hermès in 2003, worked in finance and then jewelry, and ran the leather goods division from 2008.
Patrick Thomas became the first non-family CEO in 2006, and Pierre-Alexis took the artistic role. Until this generation, the creative and business roles had always been held by one person.
Thierry Hermès, an orphan, founded the firm as a harness maker in 1837. Born in 1801 in Krefeld, he lost his family to war, disease and famine, apprenticed 16 years in Normandy and opened in Paris in 1837.
Napoleon III's rebuilt Paris put carriages on public display, and status could now be bought, which gave him customers.
Émile Hermès bet the company on the car after meeting Henry Ford. After studying US industry in 1916, he bought out his cautious brother in 1919 and moved into handbags in 1925, clothing in 1925, jewelry in 1927 and watches in 1928.
He asked his craftsmen: "What can we make with our hands that will interest our clients today." He also licensed the zipper, known in France as the Hermès fastener.
Robert Dumas added art, humor and the brand's symbols. He launched silk scarves in 1937, took the carriage logo from a painting, and adopted orange boxes because of a wartime shortage.
He hired theater set designers for the windows to sell a dream. Bundling an unmeasurable feeling with a useful object takes the product out of feature comparisons.
Jean-Louis Dumas refused consultants and made old products young again. Around 1977 consultants urged outsourcing and cheaper goods. He kept the craft, ran 1979 ads of young women wearing scarves with jeans, and grew revenue about 40 times to roughly $2 billion by 2006.
He designed the Birkin for Jane Birkin on a flight, launched in 1984, and it took about five years to catch on. Hermès has kept a no-consultants policy since.
Late in Jean-Louis's era Hermès drifted from its discipline. It took a stake of about 35% in Leica, created the Chinese brand Shang Xia in 2009, and made a $150 canvas beach bag for Japan.
Leica was divested and Shang Xia sold to the Agnelli family. Supplier stakes like John Lobb and a watch-movement maker were kept as strategic.
Arnault built a hidden stake in Hermès for nearly a decade. From 2001 LVMH bought through equity swaps, starting at 4.9%, then disclosed 14.2% in October 2010 and reached 22.6% by December 2011.
Buying up the free float lifted the share price to tempt the 80-plus relatives, and fear of being the last seller made the pull stronger. The first non-family CEO made Hermès look vulnerable.
Over 50 relatives locked 50.2% of Hermès into H51. In 2011 the family put 50.2% of the shares into a holding company for at least 20 years, later renewed for another 10, into the mid 2040s.
Former Rothschild banker Julie Guerrand left her job to run H51. The Puech brothers stayed out but gave H51 a right of first refusal on roughly 10 to 15% of the company.
The 1993 listing created the opening Arnault used. More than 80 relatives held one illiquid asset, so the family listed in Paris in 1993, selling 19% and keeping 81%.
For most relatives their share was about 90% of their net worth.
The family stayed independent because it enjoys the work. LVMH was fined about 105 million euros in 2014, and Hermès's market cap rose about 16 times from 2010.
Staying true to identity mattered more to the family than a short-term gain from copying LVMH.
Dumas caps every workshop at 250 to 300 artisans. Hermès grows by adding two to four small ateliers a year rather than building factories, and 31 now run.
Dumas's line: above 300, "it is not a workshop it's a factory." The approach scales horizontally, like adding data centers.
Hermès trains its own artisans because nobody else has any. When Dumas joined there were 250 craftsmen and two were hired a year. Today there are 7,000, with about 500 added yearly.
Schools sit in rural areas of high unemployment with 100% graduation, and a state-recognized degree opened in 2021. The average artisan is 30 and 80% are women.
Capacity grows about 7% a year, and scarcity follows. Training takes over two years and one artisan makes each Kelly, about 20 hours over a few weeks from 36 leather pieces.
About 120,000 Birkin and Kelly bags a year make up roughly 25 to 30% of revenue, and waiting lists form. Scarcity is "not the goal, that's the result."
Dumas keeps handwork only while it beats machines. In 2019 he said machines are non-negotiable once their quality beats hand stitching: "We are not a museum."
Saddle stitching is kept because it is the best method, not out of tradition.
Hermès keeps people for decades and repairs everything. Turnover is about 6%, only 4.5% voluntary, against 24% at LVMH. Fifteen repair shops mend 120,000 pieces a year.
Every item carries a blind stamp identifying its maker and year, and repairers sometimes get back bags they made.
Dumas says strategy means picking your fight. Citing Michael Porter, he argues every decision has a reverse effect and you must accept rivals will do some things better.
He is disappointed when his team says it does everything at once. Refusing fashion, outsourcing and scale follows from this.
Hermès prices below what buyers would pay. Prices rise about 7 to 8% a year on purpose, while revenue has grown 15% a year since 2013 and volume 7%.
A Birkin launched near $2,000 in 1984 and is roughly twice that in real terms. Restraint keeps Hermès from looking like the brand of $100,000 handbags.
Hermès runs marketing without a marketing department. Communication is 4.5% of revenue, two thirds of it events, against 12% at LVMH, and there are no celebrity endorsements.
Stars who buy at full price are a more authentic signal than a paid one, and Hermès avoids riding out their scandals.
Store managers choose their own stock. Twice a year each manager gets a budget to buy for local clients, carrying at least one item from each of 16 métiers.
No two stores match, which creates a treasure hunt. Company-owned stores rose from 56% in 2003 to 74%.
Hermès sells a bundle rivals cannot assemble. Exclusivity, service, craft, shopping experience and brand come together only at Hermès.
Louis Vuitton has brand and exclusivity without the craft, while independent makers have craft without brand or service.
Revenue has roughly tripled since Dumas took over. It went from about 3.5 to 4 billion euros in 2013 to 11.6 billion in 2022, with a 44% operating margin in the last twelve months.
Asia outside Japan is now 48% of sales, France 9%, and 80% of clients in China are under 40.
Money is no longer the constraint. Net income splits in thirds between dividend, capex and cash, and cash stands at $10 billion.
Growth is limited by craft training, market saturation and brand image.
The Apple Watch band tests the brand promise. Introduced to Jony Ive in 2015, Dumas calls the band an elegant contemporary object, but it is machine stitched and costs about $540.
Some relatives want a pure museum and others want to serve more customers. The band, perfume, airport stores and a website where 70% of buyers are new all point to the second view.