Hermes operating margin reaches record level

Luxury retailer Hermes’ operating margin rose to 34.3 per cent of sales in the first half of this year – a new company record.

And operating income from recurring activities rose 13 per cent, with Asia (excluding Japan) driving most of the growth.

Hermes has reported consolidated revenue of €2.713 billion in the first half, up 11 per cent at current exchange rates and 10 per cent at constant exchange rates.

Hermes’ Asian sales grew by 14 per cent, a figure the company described as “great progress, driven particularly by continental China”. Japan sales rose a more modest 3 per cent, despite the strengthening of the yen, with European sales up 7 per cent and US sales by 9 per cent.

“The performance in the first half confirmed the positive momentum of the ready-to-wear and accessories and the silk and textiles business lines,” the company said in a statement. “Growth in leather goods and saddlery (12 per cent) was sustained thanks to the success of the collections and the diversity of models. The ready-to-wear and accessories division (up 10 per cent) performed well, driven by the success of [new] collections as well as jewellery accessories and shoes. The silk and textiles business (up 6 per cent) pursued its positive momentum, with sustained demand and creative diversity.”

Perfumes sales rose 8 per cent, benefiting from the launches of Galop d’Hermès, Eau de Néroli Doré and Eau de Rhubarbe Ecarlate in the second quarter of last year, while the watches business slipped 1 per cent, “penalised by a still challenging market,” which nevertheless  showed a slight upturn in the second quarter.

Sales in Hermes other business areas – essentially jewellery and homewares – rose 13 per cent.

Hermes says its consolidated net profit increased by 11 per cent to €605 million, representing 22.3 per cent of sales.