Growth is in the “bags”
08 Feb 17
The high-end luxury maker ended the year at the top of up-market performers. In Q4, sales were up 8% (+7% at constant rates), slightly below rival LVMH which posted a reported growth of 9%. The mainstay business confirmed its resilience with 8.5% growth at CER (+10.2% reported) to reach €742m. Silk & textile products and perfumes benefited from the favourable momentum at year-end, growing by 11% and 16.9% respectively at CER. Watch sales declined by 11.6% to €45.4m. Other product categories posted modest performances. Hermes experienced strong momentum in all geographies, although a slight deceleration was reported in some markets. A marked acceleration was experienced in France and Japan, which edged up 7.1% and 8.9% respectively compared to 4.5% and 8.5% in the first nine months (at CER). However, Asia excluding Japan slowed to 4.4% vs. 8.1% as of September. In the Americas, sales increased by 5.5% compared to 8% to September. Full-year sales edged up by 7.4% at CER (+7.5% reported) to reach €5,202m. Leather goods surged by 14% at CER to reach €2,604m. Perfumes were up 8.5% to €261.9m. Otherwise, the other product categories were struggling. In Europe, sales increased by 7.5% to reach €1,683m. Asia grew at the same pace, generating revenues of €2,502m. The group confirmed its ambitious growth targets in the medium term. The 2016 margins should improve slightly. As expected, management has proposed an interim dividend of €1.5.
A beautiful acceleration in Q3
03 Nov 16
Hermes confirmed once again its resilience amid the challenging backdrop. After the misguided lowering of FY 16 growth guidance, the group’s sales accelerated in Q3 and were up 9% at constant rates to reach €1,257m (+10% reported). A favourable momentum was experienced in almost all regions. Asia Pacific outperformed with a 14.2% surge at CER to €434.3m. In Japan, sales edged up 5.6% at CER to reach €177.1m. Leaving aside France, which was hit by lower tourist inflows (-0.9% at CER), Europe impressed with a 9.8% increase at CER to €239.7m. Sales in the Americas amounted to €218.2m (+7.3% at CER). Overall, currency moves had a slightly unfavourable impact on sales. As regards products, leather goods were the leading category, as usual, posting a 16.3% rise in sales to €630.2m. Sales of ready-to-wear and textiles remained halted by the slumping demand, growing by +0.1% and -4.1% respectively. Watches are struggling in the deteriorating market momentum, posting almost flat sales yoy at €38m (+0.4% at CER). Perfumes surged 10.2% to reach €70.3m. By the end of September, sales amounted to €3,697m, i.e. a 7.7% rise at CER (+7.4% on a reported basis) underpinned by the outperformance in Asia (+8.2%) and the Americas (+8%). The cautious stance was maintained for the current year with expected growth below guidance of 8% despite the recent acceleration. The operating performance should improve thanks to the efficient foreign exchange hedges. In the mid-term, the perspectives are promising for the top high-end goods provider.
The strong resilience continues in Q2
21 Jul 16
The sales momentum remains favourable for Hermes, posting a solid performance amid lucklustre demand. H1 16 sales were up 6.1% (7.2% at constant rates) to reach €2,440m. In Q2, revenue increased by 6.2% to reach €1,250m. The performance was underpinned by Leather goods and saddlery products which surged by 15.3% to generate €1,231m in the first six months. Perfumes posted 3.5% growth to €124.6m. All other activities’ sales have slightly retreated led by ready to wear and fashion goods dwindling to €517.5m compared to €534.1m a year earlier. The group’s network experienced solid growth in all regions. Sales in Japan maintained their upward trend, growing by 17.9% in the first half. Asia was up 1.7%, pulled down by the challenging context in Hong Kong and Macao. Both the Americas and Europe posted 6.9% growth, boosted by the strong selective retail. Full-year growth in sales is likely to be below the medium-term guidance of 8%.
A good start of a cloudy year
28 Apr 16
Amid the tough context and the weakening demand, Hermes outperformed with 6.1% sales growth in Q1 16 to reach €1,191m. The group’s stores posted a surge of 8% at constant exchange rates. The group’s performance was underpinned by the mainstay leather goods and saddlery segment which experienced favourable sales momentum in all regions. The division grew by 15.5% to €591m, boosted by a strong desirability sustained by the increase in production capacities at two new sites. Furthermore, investments for a third site are ongoing. All other activities posted a negative performance, pulled down by the slumping demand in all markets. The ready to wear and fashion accessories retreated slightly by 2.3% to €256.4m. Silk and Textiles goods dropped by 9.5% to reach €121.1m. The Perfumes and Watches segments decreased by 3.5% and 3.3% respectively. From a regional standpoint, Asia (excluding Japan) impressed with a favourable sales momentum growing by 3.9% at constant exchange rates and contributing 35.8% to consolidated sales. Japan continued to enjoy double-digit growth, increasing by 12.6% to reach €167.8m thanks to a highly selective downstream. France slowed the European growth to 8.9% as it grew by 5.6%, while other European countries surged by 11.6%. The Americas posted a moderate increase of 4.4%. Overall, currency fluctuations had no significant impact on the Q1 performance.
The Chinese machine still running, but no longer for 2016
10 Feb 16
Hermes' consolidated revenues were up by 17.5% to €4,841m. This exceptional performance was boosted by the significant positive forex impact as organic growth was limited to 8.1%. Q4 sales overcame the turmoil reported in Europe and posted solid growth of 15% (7.2% on a lfl basis). The impressive performance was sustained by growth in all regions, led by Asia increasing by 21.4% (8.5% on lfl), in which Asia Pacific surprisingly grew by 20.6%. American sales improved by 24.3% while the European side was limited to a low double-digit growth rate. From a sector standpoint, Leathergoods and Saddlery, contributing up 47% to FY15 sales, was the growth driver, increasing by 12.6% at constant exchange. The estimated operating margin should be at the same level as 2014, close to 31%. The interim dividend is maintained at €1.5.