PARIS — Production capacity is the challenge for Hermès International in 2012, as it races to keep up with demand for its Birkin bags and silk scarves.
The French luxury brand beat its sales target in 2011 on the back of a better-than-expected performance during the crucial year-end holiday season, and it expects revenues to continue growing at a double-digit rate this year, depending on how well it can keep pace with demand.
“We are approaching 2012 with confidence,” Mireille Maury, managing director of finance and administration at Hermès, told WWD. “Demand is very strong and our sales growth depends on our capacity to respond to it.”
Hermès is opening two leather goods factories in France this year and plans to hire at least 600 additional people, more than half of them in its workshops, to cope with bottlenecks that have curbed sales of some items, such as leather goods.
Maury reiterated the firm’s medium-term target of posting a 10 percent annual revenue increase at constant exchange rates. Hermès did significantly better than that in 2011, with a sales increase of 18.3 percent, exceeding the company’s most recent forecast of a 15 to 16 percent bump.
The firm, which will report full results on March 22, again raised its guidance for last year’s operating margin, which it now expects to exceed 30 percent of revenues in 2011 versus 27.8 percent in 2010.
“[Last year] was all the more exceptional in that it came after a very strong 2010, meaning that in the space of two years, sales grew by more than 40 percent at constant exchange rates,” said Maury.
The data confirmed that luxury sales maintained momentum heading into the new year, despite fears of a fresh recession in the euro zone and signs that growth rates are normalizing in China.
LVMH Moët Hennessy Louis Vuitton, which owns a 22.3 percent stake in Hermès, said revenues advanced 20.4 percent in the three months to Dec. 31, while Burberry and Compagnie Financière Richemont posted gains of 22 percent and 24 percent, respectively.
Hermès reported revenues rose 15.8 percent during the period to 852.5 million euros, or $1.15 billion. Stripping out the impact of currency fluctuations, sales were up 14.3 percent in the fourth quarter. All dollar rates are calculated at average exchange rates for the period concerned.
Revenues from its network of directly owned stores rose 15.5 percent in the fourth quarter. Sales of ready-to-wear and fashion accessories were up 28.8 percent, while silk and textiles registered a 15.5 percent increase. Leather goods and saddlery rose by 10.2 percent, hampered by insufficient production capacity.
Wholesale revenues were up 14.3 percent in the fourth quarter, with perfumes up 17.1 percent, watches posting a 14.9 percent increase and tableware rising 7 percent.
In regional terms, non-Japan Asia again registered the best performance in the quarter, up 26 percent, followed by Europe — excluding France — which posted a 19.4 percent rise. In the Americas, sales rose 16.7 percent in the fourth quarter.
Hermès said it would pay an interim dividend of 1.5 euros, or $1.94, per share on March 1. In 2011, the company bought back a total of 1,292,215 shares worth 286 million euros, or $323.6 million.
Hermès opened 13 units, renovated or enlarged eight stores and took over four concessions. It plans to open or renovate another 15 stores in 2012, with planned openings in Taiwan and Abu Dhabi in April.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast