Hermes 3Q Sales Surge 11.5%

Hermes International said sales in the third quarter ending Sept. 30 grew 11.5 percent to 341.2 million euros, versus 306.1 million euros a year ago.

PARIS — Demonstrating its own horsepower in a turbo-charged luxury sector, Hermès International said sales in the third quarter ending Sept. 30 grew 11.5 percent to 341.2 million euros, versus 306.1 million euros a year ago.

In dollar terms, sales rose to $416.4 million in the third quarter from $374.3 million in the corresponding period a year earlier. Currency conversions were made at average exchange rates for the respective periods.

The figures, released to French market authority Balo on Wednesday, reflected a rebound in Japan, a sustained recovery in Europe, and a resolution of delivery problems and production bottlenecks that dented sales last year.

“Retail sales grew a bit faster than wholesale, a good indication for consumers’ appetite for the brand,” Goldman Sachs analyst Jacques-Franck Dossin said in a research note. “We also note strength in the core leather goods category…which is good for margins. Hermès enjoys a superior brand franchise within the industry and a strong growth potential.”

Goldman Sachs pegged the leather goods uptick at 13 percent in the quarter, with perfumes rocketing 29 percent.

For the nine months ended Sept. 30, consolidated sales rose 6.9 percent to 990.3 million euros, or $1.25 billion, from 926.5 million, or $1.13 billion, a year ago. Excluding the impact of currency fluctuations, the increase stood at 7.9 percent.

During a conference call, analysts were told to expect organic sales growth of 8 percent for the full year, which “may come as a slight disappointment,” given the 12 percent expected on average for the sector, HSBC analyst Antoine Belge noted in a research note.

But “it is worth noting that Hermès mentioned an improvement in market conditions in Japan,” he added.

By category, silk sales rose 10.8 percent to 107 million euros, or $135.3 million, in the nine months; bags and luggage, 8.6 percent to 398.7 million euros, or $504 million; ready-to-wear and fashion accessories, 7.8 percent to 214 million euros, or $270.5 million; perfume, 16.9 percent to 51.7 million euros, or $65.3 million; watches, 7.1 percent to 70.8 million euros, or $89.5 million, and tableware, 5.7 percent to 24.7 million euros, or $31.2 million.

This story first appeared in the November 10, 2005 issue of WWD.  Subscribe Today.

Sales of “other products,” which include John Lobb shoes and textile printing for brands outside the group, declined 3.7 percent to 33 million euros, or $41.7 million, in the nine months.

Regional figures were also stated for the nine months. Sales advanced 5.7 percent in Europe to 347.9 million euros, or $439.8 million; 5.2 percent in Japan to 286 million euros, or $361.5 million; 11.7 percent in Asia Pacific to 177.5 million euros, or $224.4 million, and 13.6 percent in the Americas to 148.3 million euros, or $187.5 million.