Hermes store in Hong Kong

PARIS — Joining the growing ranks of luxury houses embracing online commerce as a means to reach Chinese shoppers, Hermès International has set the launch date for its Chinese Internet site: Oct. 17.

While the country’s young and luxury-hungry consumers won’t be able to buy their first Birkin or Kelly bags on the site, it will offer a broad range of products, according to Hermès chief executive officer Axel Dumas.

“We only present products online that we have in stock to sell,” Dumas said at the company’s first-half results press conference at its Paris headquarters.

Other than being presented in Chinese, the site will have the same format as the revamped platforms recently rolled out in the U.S. and in Europe, with the director of the site free to select the products on offer, as individual store managers do throughout the world, he added.

The French luxury house said the new Internet sites are playing an important role in enlarging its client base, estimating that 78 percent of clients on its digital channel are new. While traffic on the new Internet site in Europe, launched in March, dipped slightly in the beginning, it has now risen significantly, according to Dumas.

“It’s a strong means of recruiting and enlarging our clientele,” he said. Japan, where the company already has an Internet presence, and South Korea, where it doesn’t, are next on the list for the online rollout.

While Hermès initially plans to focus on establishing its site in China, in particular channeling traffic to the platform, the house is open to a potential partnership with platforms like Alibaba’s Luxury Pavilion or JD.com’s Toplife at a later stage, Dumas said in response to a question.

“Why not, because the Chinese market is fairly specific — but not right away,” he said.

“It would have to be well negotiated, because we are a bit strict when it comes to presentation, prices and all that, so if we end up going in this direction, we would want to keep control of our merchandise,” Dumas added, noting that the platforms offer different configurations that make this possible.

The executive noted that Hermès prefers to keep tight control when it comes to strategic issues, like e-commerce. “I consider that if it’s strategic, we need to maintain control. In the beginning, we make our investment, it’s longer, it’s harder, it’s more risky, but in the long term it proves fruitful,” he explained.

Luxury goods houses are clamoring to serve Chinese consumers, striking partnerships along the way to help them navigate growing classes of younger, fast-moving and less loyal consumers.

“There is clearly a decrease in the age of our Chinese clientele — it was already our youngest clientele,” Dumas noted. He said the company is seeing young, non-traveling clients cropping up in some Chinese cities.

With all eyes on Chinese consumption for signs that growth could slow, Dumas said the company had seen no decline in trends in its stores, but flagged a return to growth in Hong Kong and Macau.

Hermès posted a 17 percent jump in first-half net profit, lifted by brisk global demand for high-end goods, with Asian consumers driving growth. Net profit totaled 708 million euros in the first six months of the year.

Sales during the period rose 11.2 percent at constant exchange rates to 2.85 billion euros, with Asia clocking the fastest rate of growth, up 12.8 percent. In the Americas, where the company opened a store in Palo Alto, Calif., in May and Cancun, Mexico, in March, sales were up 12.4 percent. Demand in Europe posted a 7.8 percent rise.

Operating income rose 11 percent to 1.04 billion euros, boosted by a capital gain of 53 million euros from the sale of the former Galleria store property in Hong Kong. Recurring operating margins climbed 0.2 points to 34.5 percent of sales, a new record for Hermès.

Hermès confirmed its “ambitious goal” for revenue growth at constant exchange rates in the full year.

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