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PARIS — Outpacing its luxury peers, Hermès International said “robust” Christmas business lifted fourth-quarter revenues by 6.2 percent to 540.9 million euros, or $713.4 million. At constant exchange rates, the increase stood at 1.7 percent.
This story first appeared in the February 9, 2009 issue of WWD. Subscribe Today.
“We grew everywhere except Japan,” chief executive officer Patrick Thomas said in an interview. “But clearly, the growth rates are declining.”
Hermès is slated to report profits March 19 and warned it may miss its target of flat operating margins and net profits. For 2009, Hermès is forecasting flat sales, excluding the impact of currency, and a “slight decrease” in the operating margin.
Asked about January trading, Thomas said, “We maintain the pace. There’s some momentum….We are pretty well equipped to hold on during the crisis. But there is no doubt we will be hit by the crisis.”
In the three months ended Dec. 31, sales at constant exchange rates slid 12.9 percent in Japan and receded 1.6 percent in Europe, excluding France.
By contrast, sales rose 25.2 percent in Asia-Pacific, 3.2 percent in France and 1.4 percent in the Americas.
“It’s not a depression yet,” Thomas said of the U.S. market. “For the moment, we see Europe, France and Asia, except Japan, doing pretty well. I don’t expect any improvement in Japan in 2009.”
Hermès was not immune to the chill in hard luxury: At constant exchange rates, sales of watches fell 14.4 percent in the quarter. By contrast, leather goods powered ahead 8.7 percent; ready-to-wear and fashion accessories 2.8 percent; silk and textiles 2.4 percent, and perfumes 1.7 percent.
Sales of leather bags for the year rose 21 percent, said Hermès, maker of the iconic Birkin and Kelly bags.
The Paris-based firm said it plans to continue investing in its retail network and open or renovate more than 20 stores in 2009. New locations slated for North America include Denver, Calgary, a men’s only store on Madison Avenue in New York and a unit at the Wynn hotel in Las Vegas that is already open. Hermès also plans six openings in China, as well as Istanbul and Nagoya in Japan.
Thomas said Hermès would continue to apply financial discipline across the company “to reduce overhead,” but noted there would be no staff reductions and that communication budgets would be “maintained.” The company has “postponed” extensions to some factories, but he added that it would not affect the company’s performance.
For the full year, sales at Hermès rose 8.6 percent to 1.76 billion euros, or $2.6 billion. Dollar figures are converted from euros at average exchange rates for the corresponding periods. Excluding perimeter effects and the impact of currency, the increase amounted to 10.2 percent. By region, like-for-like sales in 2008 rose 22.2 percent in Asia-Pacific; 6.6 percent in Europe; 15 percent in the Americas, and fell 2.7 percent in Japan.