Robust sales of perfumes, silk scarves and leather handbags drove solid holiday business at Hermes International, propelling fourth-quarter sales up 6 percent to 463.3 million euros, or $597.5 million.
PARIS — Robust sales of perfumes, silk scarves and leather handbags drove solid holiday business at Hermès International, propelling fourth-quarter sales up 6 percent to 463.3 million euros, or $597.5 million.
Stripping out the impact of currency, the increase stood at 9.9 percent, besting some analysts' expectations. Currency conversions were made at average exchange rates for the period.
While its overall pace trailed the double-digit gains logged by many of its luxury peers, the French firm trumpeted increases across all its product categories and cited good momentum in most regions except Japan, which is hampered by a "rather unfavorable environment," said Patrick Thomas, chief executive officer of Hermès.
"We are very much within our forecast," Thomas told WWD. "For 2007, our expectation is a growth rate between 8 and 10 percent, with real ambitions to be at 10 percent."
Underscoring his confidence is strong growth in Europe, China and the U.S., where in the first half Hermès will open a unit in Charlotte, N.C., and a major flagship on Wall Street in New York. "There is a strong evolution of the American customer towards quality, and the ready-to-wear is also selling very well," he said. "We expect a good 2007 in the States."
In China, Hermès plans to open four stores this year, bringing its complement to 13. In total, the company plans to renovate more than 20 stores this year.
By region, constant-currency sales rose by 8.5 percent in France, 12.5 percent in the rest of Europe, 9.6 percent in the Americas, 8.9 percent in Asia-Pacific and 6.3 percent in Japan.
"The challenge is Japan," Thomas noted, attributing slow growth there to "a little bit of indigestion with luxury goods" and prices that have jumped 50 percent over the last five years, due primarily to yen weakness. "We have to be very pragmatic."
Still, one analyst cheered its results in Japan. In a research note for Merrill Lynch, Antoine Colonna noted the company's 5 percent constant-currency increase in Japan for the full year "highlights, in our view, the strength of the brand even in its most mature markets."
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