PARIS — Proving itself a luxury thoroughbred, Hermès International said Wednesday that sales raced ahead 13.4 percent in the first quarter to 415.1 million euros, or $621.7 million at average exchange rates, with a robust performance across all key product categories and regions.
This story first appeared in the May 8, 2008 issue of WWD. Subscribe Today.
At constant exchange, sales in the three months ended March 31 gained 18.3 percent, with double-digit gains across all regions except Japan. The Americas surged 22.6 percent, boosted partly by the Wall Street location that opened last June.
“It was a very, very good quarter,” Mireille Maury, Hermès’ managing director of finance and administration, told WWD, characterizing America as having a “love affair” with the French brand in spite of economic woes. “And trends remain very good in the United States.”
Maury declined to pinpoint April sales, but said trends remain strong. Hermès is gunning for 10 percent organic sales growth for the full year.
The results, above analysts’ expectations and despite a turbulent financial environment, echo the strong showing by many of Europe’s top luxury players, including LVMH Moët Hennessy Louis Vuitton, Compagnie Financière Richemont, Burberry and Swatch.
An adverse currency environment remains the chief hurdle, wiping 18 million euros, or $27 million, from Hermès’ results.
Expressed at constant exchange rates, like-for-like sales gained 22.2 percent in Asia-Pacific, 12.2 percent in France and 12.1 percent in the rest of Europe. Asked if anti-French sentiments in China, spurred by interruptions of the Olympic torch rally in Paris, had impacted sales, Maury cited no ill effects. Sales in China are almost doubling annually and Hermès plans to continue adding two to four locations a year. Next up is a second location in Beijing.
Sales in Japan, a sluggish market for luxury, improved 4.2 percent, demonstrating that Hermès has “strong resilience” in a difficult environment. Maury noted that sales in the company’s own store network advanced 10 percent in the island nation, but allowed that watch sales, important in that region, declined.
By product category, sales at constant exchange rose 21.5 percent for silks and textiles, 16.3 percent for leather goods, 15.8 percent for perfumes, 15.6 percent for ready-to-wear and fashion accessories and 4 percent for watches. Sales of tableware slipped 1.1 percent, which Hermès blamed on tough comps.
Sales of other products, which include John Lobb shoes and production for third parties, fell 4.4 percent.
Maury noted sales of leather handbags jumped 25 percent, partly due to an easy basis of comparison and hot styles such as the Lindy and Victoria bags.
In a research note, HSBC analysts Antoine Belge and Erwan Rambourg said Hermès “clearly belongs to the league of luxury companies who reported robust trends.” Still, they have “factored in slower growth for all players in the future.”
Maury credited a steady program of store openings and enlargements last year for the gains in the first quarter, and noted Hermès would open or expand some 25 branches this year, with its first location in India, in New Delhi’s Oberoi hotel, slated to open its doors next week.