Hermes Canters Ahead in 2nd Quarter: Sales Up 19 Percent
August 10, 2004 - Paris
Hermes has jumped right over the current economic doldrums, scoring an impressive 19 percent leap in sales in the second quarter of this year.
Powered on by strong turnover in its core businesses of leather goods and silks, Hermes International sales cantered to 306 million Euros in sales in the second quarter, or $373 million at current exchange rates. The growth marked an increase in business of over $50 million in just one quarter.
The news marked the latest bullish figures from the luxury goods industry, which has revived far more rapidly than the mass distribution sector in the current jobless recovery.
Internationally, the fastest growth was in Asia, outside of Japan, where turnover screamed ahead 43 percent to 50 million Euros.
In the Americas, sales improved 25 percent to 42 million euros; in France, they grew 15 percent to 62 million euros; and in the rest of Europe, business advanced 23 percent to 52 million euros.
However, Hermes management was keen to dampen down any exaggerated enthusiasm, and included a earning in its news release that profits could be flat in 2004. The cool prediction was based on expectations of negative currency movements and heavy future advertising costs, expected to surge by more than 40 percent.
Hermès attributed the steep rise in its ad spend to new product launches, primarily in fragrances.
The one downside in the news was the modest rise in sales of ready-to-wear, which had been expected to surge as the first collection for Hermes by its new creative director Jean Paul Gaultier reached retail shelves. Moreover, as the price point of the new Gaultier-designed collection was understood to be significantly higher than that of his predecessor Martin Margiela, there is some speculation that rtw sales may actually have declined.
Looking at the first six months of 2004, Hermes group sales rose 13 percent to 620 million euros, or $756 million.
Hermes closed at 157.70 Euros on the Paris Bourse Tuesday, up1.35 for the day and up 29.69 percent over the past twelve months. Like we said, cantering ahead.
