By  on October 4, 2007

PARIS — If you thought clothing was an afterthought or just an image vehicle for leather goods powerhouse Hermès International, think again.

Ready-to-wear and fashion accessories already rank as Hermès' second-largest business, and the house is gunning to build the category to 30 percent of sales in the next five years, said Patrick Thomas, chief executive officer.

Citing rapid sales growth in belts, fashion jewelry, footwear, leather apparel and men's wear, the house plans to devote more floor space to those categories in its boutiques worldwide as they are built or renovated.

For example, when the company's expanded flagship at 24 Faubourg Saint-Honoré here opens later this month — making it the largest Hermès store in the world — it will have doubled the space devoted to these categories, more than 3,000 square feet each for women's wear and men's wear.

The new store in the Midosuji district of Osaka, Japan, which bowed in April, also boasts a significant space for fashion, indicative of the new priority.

"Not everyone knows Hermès is also a ready-to-wear company and we have to make it known," Thomas said in an interview, joined by executive vice president Guillaume de Seynes and men's wear designer Veronique Nichanian. "For us, ready-to-wear and fashion accessories are essential to show the creative part of the company. The idea is to have a very balanced world."

Sales of rtw and fashion accessories accounted for 19 percent of group sales last year, rising 1 percent to 294 million euros, or $369.4 million at average exchange rates. Leather goods, including saddlery, remain the dominant category, generating 44 percent of Hermès' sales.

Growth in leather goods is limited by production constraints, even though the number of craftsmen at Hermès has vaulted to 1,800 from only about 300 in 1989, Thomas noted.

In fashion, the arrival three years ago of couturier Jean Paul Gaultier as women's designer brought Hermès torrents of press attention, and plenty of new customers, especially in the U.S., Thomas said, while acknowledging the designer switch likely scared off some old-guard customers or those loyal to the previous designer, Martin Margiela.

At the same time, Hermès had logistical wobbles in rtw that caused late deliveries, denting sell-through and profitability, but those have largely been remedied, Thomas said, stressing, "Today we are in a position where ladies fashion is growing nicely."

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