PARIS — Hermès International on Thursday lowered long-term guidance despite reporting an 11.1 percent increase in revenues in 2014, above its target of annual growth of 10 percent at constant exchange rates.
The maker of Birkin bags and silk scarves crossed the threshold of 4 billion euros in revenues for the first time last year. It said it was aiming for a sales increase of 8 percent at constant exchange rates in 2015, citing “economic, geopolitical and monetary uncertainties over the world.”
Hermès, which is due to publish annual results on March 25, said its operating margin for 2014 should be in the region of 31 percent, below the historic high of 32.4 percent reached in 2013. It previously said profitability would be “slightly” below the previous year’s record.
The French luxury firm plans to pay an interim dividend of 1.50 euros, or $1.70 at current exchange, per share.
Sales rose 11.8 percent in the fourth quarter to 1.22 billion euros, or $1.53 billion, the best quarterly performance of the year, equivalent to a 9.6 percent increase at constant exchange rates. This reflected “buoyant” activity in the company’s own stores, which posted a rise of 11.6 percent at constant exchange rates, Hermès said.
Bernstein Research noted that although the results were in line with market expectations, they showed Hermès was more resilient than its luxury peers. “We believe the market will view these results positively, in particular with reference to Asia-Pacific, which did not appear to be impacted by Hong Kong protests and soft Macau footfall as other peers have recently reported,” Bernstein said, adding that it expects Hermès to continue posting double-digit revenue growth.
The fourth-quarter results follow increases of 10.6 percent in the third quarter and 5.8 percent in the second quarter. All dollar rates are calculated at average exchange rates for the period.
The figures come on the heels of mixed data from rival luxury firms. LVMH Moët Hennessy Louis Vuitton reported a 10 percent jump in fourth-quarter revenues, while Compagnie Financière Richemont recorded a 4 percent increase in sales in the three months to Dec. 31. Kering is set to publish its results next week.
Hermès said sales of leather goods and saddlery were up 13.9 percent at constant exchange rates in the fourth quarter, while ready-to-wear and fashion accessories progressed 8.4 percent, silk and textiles gained 5.4 percent and other Hermès sectors were up 16.2 percent, boosted by the house’s jewelry collections.
Perfumes posted a 13.8 percent sales rise in the quarter, but watches were down 12.7 percent, reflecting the continued weakness of Asian demand for luxury timepieces in the wake of a Chinese government anticorruption campaign.
Annual sales totaled 4.12 billion euros, or $5.47 billion, up 9.7 percent when adjusted for the negative impact of currencies, mainly the weak Japanese yen. Currency fluctuations shaved 52 million euros, or $69 million, from the revenue total.
Sales in directly operated stores posted solid growth in all regions. Revenues in the Americas jumped 14.5 percent at constant exchange rates during the fiscal year, while Asia-Pacific — excluding Japan — was up 13.1 percent. Sales in Japan rose 12.9 percent, while Europe gained 7 percent.
The group opened China’s first Maison Hermès in Shanghai in September and added another two stores in Mainland China in the fourth quarter, according to comments made by management in a conference call with analysts, reported by HSBC.
Hermès raised its prices by 10 percent in Japan in January and plans price hikes of 3 to 4 percent for the rest of the world in 2015, HSBC added.
Hermès shares closed down 0.5 percent at 292.75 euros, or $355.83, on the Paris stock exchange.