PARIS — Hermès International reported on Tuesday that its second-quarter sales beat expectations with a 17.9 percent jump, thanks to strong momentum in the United States and China.
This story first appeared in the July 20, 2011 issue of WWD. Subscribe Today.
The French luxury firm also raised sales guidance for 2011, saying it now expects revenue growth of 12 to 14 percent at constant exchange rates. This compares with a previous forecast of average annual sales growth of 8 to 10 percent at constant exchange rates, but remains below the 18.9 percent achieved last year.
Revenues rose to 668.4 million euros, or $961.9 million, in the three months ended June 30, from 566.9 million euros, or $723.3 million, in the year-ago period, representing an increase of 21.8 percent when stripped of the impact of currency fluctuations. Dollar figures are calculated at average exchange rates for the periods concerned.
Hermès, which will publish full first-half results on Aug. 31, said operating profit should register a “significantly” higher growth than sales compared with the first half of 2010.
The company estimated the operating profit margin rose 4 to 5 percent versus the same period last year, including the gain on the sale of its 45 percent stake in Jean Paul Gaultier to Spanish group Puig in May, which generated accounting profits of 30 million euros, or $43 million.
In 2011 as a whole, the group expects the operating profit margin to be “close to the record high achieved in 2010,” Hermès stated. Last year, the margin widened by 3.6 percentage points to 27.8 percent, its highest level since Hermès went public in 1993.
In the second quarter, sales rose 24.4 percent in Asia Pacific, excluding Japan, which posted a 0.5 percent increase in revenues despite the impact of the earthquake and tsunami that hit the country in March. Sales rose 21.5 percent in the Americas and were up 20.8 percent in Europe, fueled by a strong performance in France and the acquisition of two concessions in Moscow in May.
Sales in the company’s own stores were up 17.3 percent in the quarter, while the wholesale channel posted a 15.4 percent increase.
All sectors posted gains, led by ready-to-wear and other accessories, up 34.3 percent, and silk and textiles, up 27.2 percent. Leather goods and saddlery, which accounted for around half the company’s revenues during the period, rose 9.1 percent.
Perfumes were the only pocket of weakness, up just 4.1 percent in the quarter despite the launch of the “Un Jardin sur le toit” fragrance at the beginning of the year. This contrasted sharply with tableware, another category sold outside the company’s own stores, which posted a 38.3 percent jump. Hermès has been placing a growing emphasis on home wares, which represent 40 percent of the offer at its new Paris store on the Left Bank.