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: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty