Hermes International posted a strong finish to 2005, even if its 8 percent gain in fourth-quarter sales, to 437.1 million euros, or $520 million, was behind the double-digit pace of many of its luxury peers.
PARIS — Hermès International posted a strong finish to 2005, even if its 8 percent gain in fourth-quarter sales, to 437.1 million euros, or $520 million, was behind the double-digit pace of many of its luxury peers.
The results were also a nose shy of analysts' expectations, sending shares of Hermès down 0.1 percent on Wednesday to close at 209 euros, or $249.64, on the Paris Bourse.
On the plus side, "excellent" consumer reaction to the scent Un Jardin sur le Nil lifted sales of the perfume category by 12.5 percent for the full year at constant exchange, Hermès said.
The fashions of Jean Paul Gaultier, now in his second year as designer of Hermès ready-to-wear for women, also helped "revitalize" its rtw and accessories division, where full-year sales rose 7.6 percent.
Mireille Maury, managing director of finance and administration at Hermès, highlighted an acceleration of growth in the second half and a "very good" month of December, when sales were up 17 percent in its European boutiques. She said January and February sales were "in line" with the overall trend of 2005, and that an increase in margins would allow Hermès to achieve a double-digit gain in operating profits, which the company is slated to report March 23.
Meanwhile, Hermès plans to ramp up its schedule of store openings and renovations to 30 this year from eight in 2005. Forthcoming openings include a Maison Hermès in Seoul, South Korea, a new seven-story building slated to open in June. Hermès' glass brick Maison in Tokyo's Ginza district will be enlarged come October with a new neighboring building that has 5,000 more square feet of selling space. New locations for this year include Amsterdam; Charlotte, N.C.; Bangkok, and Hangzhou, China.
In the quarter ended Dec. 31, sales rebounded in Europe, excluding France — up 16.9 percent at constant exchange to 79.1 million euros, or $94.1 million. Sales in Japan, which account for 29 percent of Hermès' total business, were up 7.2 percent in the period to 128.5 million euros, or $153 million, a big improvement from a "weak" first half, Maury noted. Sales gained 7.9 percent in Asia-Pacific (to 68 million euros, or $81 million) and a modest 1.3 percent in the Americas (to 67.9 million euros, or $80.7 million), which Hermès blamed on fewer selling days. "The trend there remains good," she added.By category, sales of high-margin bags and luggage increased 5.4 percent at constant exchange to 169.2 million euros, or $201.2 million. Hermès said increased production capacity boosted the division, but that demand continues to outstrip supply. Maury said leather handbags were among the best performers, particularly the Birkin, Kelly and Bolide models.
In a research note, Goldman Sachs analyst Jacques-Franck Dossin applauded a decision by Hermès management to cut production of canvas bags, which threatened to undermine its brand image. These "were initially launched as beach bags, but became increasingly used as city bags, particularly in Japan," Dossin wrote.
Overall, he characterized the fourth-quarter performance as "good," given a challenging basis of comparison. "We continue to see Hermès as one of the companies with the strongest brand equity in the sector," the report said.
In the rtw and accessories category, which includes men's wear by designer Veronique Nichanian, sales rose 7 percent at constant exchange to 79.7 million euros, or $94.8 million, in the quarter. Watch sales, however, slipped 2.1 percent to 33.2 million euros, or $39.5 million.
For the full year, sales gained 7.2 percent to 1.43 billion euros, or $1.78 billion. Dollar figures are converted at average exchange rates for the respective periods.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews