PARIS — The Birkin could take a backseat to fashion this year: Hermès International plans to up such fast-growing categories as jewelry, ready-to-wear, shoes and belts.
So says chief executive officer Axel Dumas, who presented the French firm’s full-year results on Thursday, headlined by a record operating margin of 32.4 percent last year, a 0.3-point improvement over 2012 that was lifted partly by deft currency hedging.
Net income in 2013 rose by 6.8 percent to 790 million euros, or $1.05 billion, reflecting higher taxation, particularly in France.
Revenues last year rose 7.8 percent to 3.75 billion euros, or $4.99 billion, as reported.
Dollar figures are converted from euros at average exchange for the 12-month period ended Dec. 31.
Hermès reported operating income rose 8.9 percent to 1.21 billion euros, or $1.62 billion, leaving it with a cash pile that reached a historic high of 1 billion euros, or $1.36 billion.
“We may have a billion in cash, but we’re not Apple yet,” Dumas remarked to a round of chuckles among the analysts assembled at the company’s headquarters on the Rue du Faubourg Saint-Honoré here.
Sounding sanguine, Dumas voiced confidence for 2014, tinged with caution, echoing the stance of the previous ceo, Patrick Thomas, who retired earlier this year.
Dumas warned analysts to expect a drop in profit in 2014 given strong currency headwinds, particularly in Japan, where a declining yen prompted Hermès to raise prices by 10 percent on Feb. 17. A hike in value-added tax in the island nation, scheduled for April, is likely to further dampen demand.
The ceo sounded more bullish on China, saying consumers there are turning increasingly toward high-quality products whose appeal derives from elite craftsmanship, rather than logos. In addition, more women are shopping for luxury goods in China, and the clampdown on bribes and gifting there is a “fight against corruption, not luxury goods,” he said. Dumas noted that watches and liquors are hardest hit, along with brands associated with gifts, of which Hermès is not one.
“We haven’t seen any real impact on our financials in China,” he said.
In September, the company plans to open its Hermès Maison in Shanghai, only the fifth unit in the world with its own dedicated building and a complete product offering and cultural attractions under one roof. (The others are in New York, Tokyo, Seoul and Paris.) Hermès is also plotting a new unit in Beijing, and an expanded location in Chengdu.
In total, the company plans to open six stores this year, and renovate and enlarge 14 more.
“The idea is to increase the penetration with local customers,” Dumas explained.
He waved off a question about the brand’s Russian clientele, given the political crisis there and in Ukraine, noting the nationality accounts for “well below 5 percent” of the firm’s business, and Russians tend to shop mainly abroad.
Despite morose economic conditions in Europe, Dumas said that all countries have expanded their local clienteles with the exception of Spain and Greece.
The company provided no specific earnings or sales guidance for 2014, vowing to “reinvent itself and push the limits of excellence.”
In a research note, Bernstein Research analyst Mario Ortelli called the earnings underwhelming and said that, still, “we expect Hermès to deliver resilient revenue growth and maintain top-notch EBIT [earnings before interest and taxes] margins and ROIC [return on invested capital] thanks to its strong brand positioning at the top of the ‘exclusive’ niche.”
He cautioned that the stock price is bound to recede as its current pricing reflects an “M&A premium” fanned by the accumulation of a 23.1 percent stake by rival LVMH Moët Hennessy Louis Vuitton.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye