PARIS — Roiling global markets did not discourage well-heeled shoppers from flowing into Hermès shops in July and August.
“We haven’t seen any decrease in traffic in our stores, not even in Japan,” Hermès International chief executive officer Patrick Thomas declared Wednesday as the French luxury firm reported net profits increased 49.5 percent in the first half on a revenue rise of 22 percent.
Net income totaled 290.9 million euros, or $418.6 million, versus 194.6 million euros, or $279.9 million, in the year-ago period. Profits include a 29.5 million euro, or $42.3 million, gain from the disposal of its 45 percent stake in Jean-Paul Gaultier, which was sold to Spain’s Puig in May.
Sales in the second quarter climbed 17.9 percent to 668.4 million euros, or $937.6 million, versus 566.9 million euros, or $795.2 million, a year ago.
Dollar figures are converted from euros at average exchange rates for the periods in question.
In the half, revenues rose to 1.31 billion euros, or $1.88 billion, from 1.07 billion euros, or $1.55 billion, reflecting solid momentum across all geographic regions except Japan, where sales were flat.
That said, Hermès cautioned Wednesday that robust demand for luxury is likely to outstrip its inventories and production capacity in the second half. Reiterating an early target, the maker of Birkin bags and colorful silk scarves said it expects full-year revenue growth to tally 12 to 14 percent, while operating margins are likely to be on par with 2010, when they reached a record high.
Operating profits in the six months ended June 30 increased 37.3 percent to 418.1 million euros, or $586.5 million, versus 304.5 million euros, or $438 million.
Thomas trumpeted that Hermès logged its best performance since going public in 1993 as its operating margin rose 3.7 points to 32 percent. He also noted that operating profits doubled over the last two years.
Speaking to analysts and journalists at its headquarters here in a spare room paneled with blonde wood, Thomas credited astute buying and currency impacts for the strong margin gains. Price increases in the first half were marginal, averaging 1.3 percent.
Questioned about its accelerating profitability, Thomas noted that Hermès boasts high margins across all product categories, and not only leather goods. “We’re very rigorous as far as margins are concerned,” he said.
However, he noted raw material costs and a higher communications spend in the second half would likely dent margins.
At constant exchange rates, sales in the half advanced 30.5 percent for ready-to-wear and fashion accessories, 30 percent for watches, 29 percent for silk and textiles, 25.1 percent for tableware, 17.6 percent for perfumes and 14.5 percent for leather goods and saddlery.
By region, sales rose 33.9 percent in the Americas; 30.2 percent in Asia-Pacific, excluding Japan; 20.8 percent in France; 19.6 percent in the rest of Europe, and 0.1 percent in Japan.
Thomas highlighted the strong figures in so-called “mature” markets like America and France, while noting that such figures reflect strong flows of Chinese tourists.
Hermès recently opened a freestanding store in Mumbai, billed as the first street-front luxury shop in India, where most players operate in hotel-based locations. Hermès executives described a strong reception to the store, which boasts a complete product offer and will be officially inaugurated next month.
There was little mention at the meeting of Hermès’ unwanted suitor, LVMH Moët Hennessy Louis Vuitton, which in July disclosed that it had increased its stake in Hermès to 21.4 percent in the first half from the 20.2 percent it declared in December.
However, Thomas noted that “no share has been bought from a family member” and that he was “serene” about a decision from the French appeals court expected on Sept. 15 concerning the family’s quest to group more than 50 percent of the share capital into the nonlisted holding company. The move has been green-lighted by the French market authority, or AMF, but an appeal was filed by the French Association for Minority Shareholders, or ADAM, as reported.
Hermès itself has been busy buying up shares to honor stock-option commitments.
“We haven’t yet covered all the shares we have attributed. We still need to purchase a few shares, not too many,” Thomas said, declining to specify the size of the remaining free float.
Shares in Hermès closed up 0.4 percent at 266 euros, or $384.84 at current exchange, on the Paris Bourse.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast