PARIS — Hermès may offer turbans fit for a maharajah soon.
At a general shareholders meeting here on Tuesday, the French luxury company said it had established a joint company to open stores in India, with a first unit expected in New Delhi.
Christian Blanckaert, executive vice president of Hermès International in charge of international affairs, told the assembly that Hermès held a 51 percent majority share in the venture with a prominent Indian family, which he did not name. "We are near a first store in New Delhi," said Blanckaert.
Meanwhile, Hermès also trumpeted sales elsewhere in Asia, particularly China, though Japan, which has been a drag for most prominent luxury players recently, remains a tough spot.
Blanckaert said sales in China exploded 70 percent last year and the firm would open an additional three stores there this year, bringing its total to 10. Another three Chinese stores are on the drawing board for 2009, Blanckaert said.
Patrick Thomas, chief executive officer, provided few indications about current trading.
He reiterated a target of 8 to 9 percent comparable-sales growth for the year. "Maybe [we'll make] 10 percent if Japan improves," he said.
Nonetheless, Thomas seemed skeptical that sales would explode in the island nation. He also seemed doubtful that monetary exchange values, especially the ratio between the euro and the dollar and yen, would be favorable.
Thomas said America, where Hermès this month is opening a store on Wall Street in Manhattan, holds "enormous potential" for development. He said Hermès had some 40 store "projects" in progress and that the firm would spend some 70 million to 80 million euros, or $93.8 million to $107.2 million, to open and renovate stores this year.
Most significantly, Hermès is renovating and expanding its Faubourg Saint-Honoré flagship here, which is scheduled to open in the fourth quarter of 2007. Blanckaert said each store the company renovates usually generates between 25 and 30 percent improved sales.
In May, Hermès reported a weaker-than-expected 1.3 percent gain in first-quarter sales, to 366.1 million euros, or $490.6 million at current exchange.
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