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Sales at Hermès surged 28 per cent at constant exchange rates to €3.32 billion in the second quarter “with a strong momentum across all business lines and all regions”, the company said on Friday.
Analysts were impressed. “Hermès blows the whole luxury goods industry out of the water, producing a whopping 28 per cent organic growth (above consensus of 23.6 per cent) and 44 per cent EBIT margin in the first half,” said Luca Solca, senior luxury analyst at consultancy Berstein. The company’s share price rose 2.7 per cent in early trading sessions on Friday.
Growth was led by Asia Pacific excluding Japan (up 33.7 per cent) with China in line with the overall figure and sales in Europe up 21.3 per cent.
Hermès also reported a strong performance in the US, with sales up 20.5 per cent. That compares very favourably with other luxury players: LVMH was down 1 per cent, Richemont 2 per cent and Kering a hefty 23 per cent. Hermès executive chairman Axel Dumas told analysts in a call on Friday morning: “We have seen in the US the incredible desirability of the house and our products. We didn’t see that fading during this semester, with a mix of very faithful clients, traffic continuing to grow in our stores, and the good resistance of our digital sales. Maybe it’s uncommon compared to the rest of the industry. [Our] price increase in the US [has been] quite limited — 3.5 per cent — which means most of our growth in the US is through volume increase.”
By category, ready-to-wear and accessories were up by 35.1 per cent, leather goods and saddlery by 23.2 per cent, other Hermès categories including jewellery and home products by 36.1 per cent, watches by 24.2 per cent and perfume and beauty by 12.4 per cent.
“The power of the Hermès brand is unquestionable,” noted Solca. “Long waiting lists smooth out any short-term demand hiccups. Hermès taps into the more resilient high-end consumers and benefits from pricing headroom in 2023 — most competitors have used that already.”
The Hermès management team flagged that margins are typically lower in the second half. The group spent €260 million on communication in the first half, up 30 per cent, and plans to spend a total of €600 million on communication in the full year.
Hermès announced in June a share plan that will enable all employees worldwide to become shareholders. This comes after Hermès granted a €4,000 bonus earlier this year to all employees.
Summarising the sparkling results, Axel Dumas said: “We see in tough times a flight to quality. Maybe we benefitted from the flight to quality.”
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