PARIS — Citing net profits that rose 6.8 percent last year to $228.2 million, Hermès International said Thursday that it would press ahead with its expansion drive despite a "difficult" international political climate.
Hermès plans to add 15 sites, and expand and renovate "many" other units, while enlarging two major leather goods factories in the Lyon and Ardennes areas.
"The Hermès group plans to vigorously pursue its strategy of creating, developing its know-how, expanding its store network and its production capacity," the company said in a statement, declining to specify its sales or earnings targets.
Analysts have characterized Hermès as one of the luxury brands best positioned to weather the uncertain economic and political climate. Earlier this week, Morgan Stanley luxury analyst Claire Kent upgraded Hermès’ stock to equal-weight from underweight, largely because the stock underperformed the industry by some 16 percent over the past six months.
"We continue to believe that the Hermès brand will be one of the most resilient brands in a weak environment, and therefore see limited potential for either earnings disappointment or continued stock underperformance," she wrote. "In addition, we see Hermès as a nest egg for long-term investors."
Kent also praised the company’s "first class" management and "good" brand momentum.
Last year, operating profits rose 4.3 percent to $339.1 million compared with $325.2 million a year earlier. Dollar figures are converted from the euro at current exchange. Operating margins were 25.8 percent, while net margins were 17.3 percent compared with 16.4 percent a year ago.
Sales inched up 1.3 percent to $1.32 billion, as reported. Japan lead regions with a 17 percent increase and the Americas were up 4 percent. Excluding currency fluctuations, sales for the year moved ahead 5.9 percent.
Investments last year totaled $107.6 million, with about half going to open five new units and renovate 12 branches. The Hermès network consists of 216 stores, of which 114 are directly operated. Hermès said investments in stores, a real estate complex in Hong Kong and a new logistics center in Paris were financed by a cash flow last year that totaled $289 million. The company noted that China is a priority for Hermès in coming years.At its shareholders’ meeting scheduled for June 3, Hermès will ask for approval of a dividend of $1.75 a share, excluding a tax credit. Shares in Hermès slipped 4.1 percent to $123.90 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