Record profitability for Hermes after China-driven boom
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A Hong Kong property windfall and the Hermes Asia business helped the luxury label set a record profit margin during the first half of this year.
Hermes says recurring operating profitability reached 34.5 per cent of sales, with net profit rising 17 per cent to €708 million (US$824 million).
And after including a capital gain of €53 million from the sale of the former Galleria store in Hong Kong, operating income reached €1.037 billion, up 11 per cent to reach 36.3 of sales.
Hermes Asia sales – excluding Japan – rose 15 per cent, the strongest performing market internationally, continuing what the company described in a statement as “an outstanding performance, with positive momentum in continental China and the whole region”.
During the half year, Hermes Asia benefitted from the opening of the Landmark Prince’s store in Hong Kong in January. Another new store opened in Changsha in May.
Sales in Japan rose by 7 per cent.
The Hermes Asia performance better that of the Americas (up 12 per cent), Europe excluding France (up 7 per cent), and France (up 8 per cent).
Hermes global sales reached €2.853 billion, up 11 per cent at constant exchange rates and by 5 per cent at current exchange rates.
“Hermes achieved an exceptional performance in the first half of the year,” said Axel Dumas, executive chairman. “Our commitment to the quality of know-how, the spirit of innovation as well as the creativity, always renewed, and the dedication of the women and men of Hermes, base the singularity and the integrity of our economic model; a strong model in a worldwide context that remains uncertain and unstable.”
By product category, ready-to-wear led the way rising 17 per cent, thanks to broad acceptance of its “pertinent and bold” designs, the company said. Fragrance sales rose 15 per cent, watches by 9 per cent, leather goods and saddlery sales rose 8 per cent and silk and textile sales by 7 per cent.
Other Hermes business lines, which include jewellery, art of living and Hermes Table Arts, grew by 24 per cent.
Questions & Answers
Q.Which markets contributed most significantly to Hermes' strong sales performance in the first half of the year?
Which markets contributed most significantly to Hermes' strong sales performance in the first half of the year?
Hermes Asia, excluding Japan, was the strongest performing international market, with sales rising 15 per cent. The Americas also saw strong growth, with sales up 12 per cent.
Q.What product categories experienced the highest growth during this period?
What product categories experienced the highest growth during this period?
Ready-to-wear led the way with a 17 per cent increase in sales. Other Hermes business lines, including jewellery and art of living, grew by 24 per cent, the highest percentage rise.
Q.How did the Hong Kong property sale affect Hermes' overall financial figures?
How did the Hong Kong property sale affect Hermes' overall financial figures?
A capital gain of €53 million from the sale of the former Galleria store in Hong Kong boosted operating income to €1.037 billion. This contributed to operating income reaching 36.3 per cent of sales.