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Strong Sales in Leather Save Hermès in 2nd Quarter

PARIS — Sales at French luxury group Hermès International pulled back slightly in the second quarter but, propelled by a nearly 19 percent increase in the firm’s leather goods business, moved ahead in the six...

PARIS — Sales at French luxury group Hermès International pulled back slightly in the second quarter but, propelled by a nearly 19 percent increase in the firm’s leather goods business, moved ahead in the six months.

This story first appeared in the August 13, 2002 issue of WWD.  Subscribe Today.

Second-quarter sales tallied $277 million, down 1.7 percent compared with $282 million in 2001. Excluding currency fluctuations, sales were up 3.3 percent in the period. Dollar figures are converted from the euro at current exchange rates.

For the half, sales were up 2.5 percent, to $572.2 million, and up 6.1 percent on a comparable basis.

“Hermès’ first-half sales were slightly below our expectations, and of the market’s expectations,” said Andrew Gowan, an equities analyst at Lehman Bros. in London. “Hermès highlighted the World Cup effect and exchange rates as causes, phenomena similarly identified by its peers.

“The first half was weaker than expected for Hermès but far from disastrous; it stacks up with the rest of the industry,” he continued.

Leather goods, Hermès’ largest merchandise segment, generated sales of $179.4 million, up 18.8 percent, during the half, and accounted for 31.4 percent of total revenues. Other product segments, in descending order of semiannual revenues were: ready-to-wear, up 2.3 percent to $80 million; silks, down 11.2 percent to $70.6 million; lifestyle products, up 10.4 percent to $69.7 million; watches, down 1.1 percent to $51.6 million; other Hermès items, including agendas, enamel products, jewelry, gloves, hats and shoes, down 5.7 percent to $49.6 million; fragrances, down 6.1 percent to $26.1 million; tableware, up 1.6 percent to $21.7 million, and other activities, including John Lobb shoes, down 28.1 percent to $23.1 million.

Broken down geographically, Asian sales advanced a robust 19.4 percent to $252.5 million in the half and those in Europe were up 0.5 percent to $215.8 million. Revenues in the Americas were off 7.4 percent to $83.2 million while other categories, including travel retail, dropped 16.1 percent to $20.6 million.