PARIS — It appears reports of luxury’s decline might be greatly exaggerated — at least where Hermès is concerned.
The maker of Kelly bags and silk scarves on Thursday raised its guidance for 2013 revenues and margins after reporting an acceleration in sales in the second quarter, helped by a strong performance in the U.S. and sustained demand in Europe and China.
Hermès International said revenues in the three months ended June 30 totaled 910.4 million euros, or $1.18 billion, up from 814.5 million euros, or $1.05 billion, during the same period a year earlier.
This represented a rise of 11.8 percent in reported terms and an increase of 16 percent when stripping out the impact of exchange rate fluctuations. All dollar rates are calculated at average exchange for the periods to which they refer.
The second-quarter figures beat analysts’ expectations, sending Hermès shares up 4.5 percent to close at 262.45 euros, or $341.37 at current exchange, on the Paris stock exchange.
Hermès said that although it remained cautious, full-year revenues at constant exchange rates could now grow by more than its previous target of 10 percent, putting it ahead of the majority of its peers.
Consultancy Bain & Co. forecasts the luxury goods market overall will grow by 4 percent to 5 percent in 2013, a slowdown from the annual double-digit growth posted in the past three years.
Hermès added that depending on currency fluctuations, its operating margin in 2013 could be close to the record high of 32.1 percent posted last year. Foreign exchange headwinds produced a negative impact of 53 million euros, or $69.6 million, on the company’s revenues in the first half.
The effect was particularly pronounced in Japan, where sales fell 12.5 percent in the second quarter — but were up 8.9 percent when excluding currency effects. Sales in the rest of the Asia-Pacific region were up 15.6 percent during the period.
Revenues in continental China grew 20 percent at constant exchange, Dumas said, noting that Chinese demand for watches remained weak, following a government crackdown on gift-giving, but other sectors were holding up.
Chinese tourists also contributed to the healthy performance in France — up 14.4 percent — and the rest of Europe, which posted 14.7 percent growth in the second quarter. The fastest increase was in the Americas region, which recorded a 19.4 percent jump.
“This is due partly to a favorable comparison basis, but also to the popularity of our stores and products. Jewelry, in particular, is doing extremely well,” said Dumas, adding that Hermès is preparing to unveil its renovated store on Rodeo Drive in Beverly Hills in September.
The leather goods and saddlery division, which accounts for nearly half of all sales, posted a gain of 6.9 percent in the second quarter, after increasing just 3.9 percent in the first three months of the year.
In silk and textiles, sales rose 7.1 percent, while ready-to-wear and fashion accessories saw revenues grow 19.9 percent. Sales in the “other sectors” segment, which includes jewelry and home wares, jumped 27.5 percent.
“Jewelry represents a growing portion of our sales, with very strong demand,” said Dumas, who formerly headed the jewelry division at Hermès.
Sales of watches eased 0.7 percent, while perfumes were up 21.5 percent, boosted by the positive reception to its new women’s perfume, Jour d’Hermès, and the continued success of men’s fragrance Terre d’Hermès.
Sales of leather goods remained capped by production capacity, something the company is addressing by building two leather goods factories in eastern France that will eventually create 400 jobs.
“We are trying to produce as much as possible, because we really don’t enjoy being unable to meet a request from a customer who may be disappointed not to find a product in our stores,” said Dumas. “Opening two new factories with more than 400 staff in France is a sign of confidence, but it also requires a real training and learning effort, which means that some of our best craftsmen will be on hand to impart their knowledge. It’s all about finding a balance between those that are experienced and those that are learning.”
Exclusive: @britneyspears is continuing to expand her brand. The pop icon, who appears in @kenzo ’s latest campaign, is partnering with Epic Rights to launch a line of branded merchandise. Read @hernameislex ‘s story, link in bio. #wwdnews #britneyspears
The Duchess of Cambridge channeled Princess Diana’s look upon giving birth to Prince Harry, when she and the Duke of Cambridge departed the hospital with the new baby Prince this afternoon in London. #wwdeye #princeofcambridge
The new Prince of Cambridge has arrived! The Duke and Duchess of Cambridge posed with the 8-pound newborn. She wore a look from one of her go-to designers, @jennypackham. Tap link in bio for more. #wwdeye #princeofcambridge
Jewelry label @alisonlou has made a name for itself with fine jewelry that speaks to the Millennial market. Now @twallz21 reports that the label is bringing those playful ideas to a new affordable line of lucite hoops with the launch of Loucite by Alison Lou. Here’s a look from the line modeled by @emrata. #wwdaccessories
@sarahjessicaparker and @gilt are teaming up on a bridal ready-to-wear line. Tomorrow, Parker will launch SJP by Sarah Jessica Parker Bridal — and as part of the launch, Gilt will offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear collection that were designed to complement the new line. Made out of 10 styles, the line is designed for a variety of occasions, from bridal showers to receptions. Get more details on WWD.com #wwdfashion
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)