PARIS – Hermès International said organic growth slowed in the first quarter, in line with its full-year guidance, but the maker of Birkin bags and silk scarves registered unexpectedly strong sales in Japan.
Revenues totaled 1.12 billion euros, or $1.27 billion, during the three-month period, representing a rise of 8 percent when stripping out the effect of currency fluctuations, which contributed 103 million euros, or $116 million, in the quarter.
This compared with growth of 9.6 percent in the fourth quarter of 2014 and with a 10.1 percent increase in the same quarter last year.
On a reported basis, sales jumped 18.9 percent in the first quarter as Hermès continued to post growth in all regions, despite a “more challenging” environment in Hong Kong and Macau, where tourist flows have been disrupted by pro-democracy protests.
The French luxury house said it was maintaining its guidance for a sales increase of 8 percent at constant exchange rates in 2015.
Sales in the group’s stores were up 10 percent at stable exchange rates in the first quarter.
Japan recorded a 15.2 percent increase despite a high comparison basis last year, when consumers anticipated purchases ahead of an increase in value-added tax. The rest of the Asia-Pacific region grew by a combined 7.7 percent, while the Americas posted a 9.6 percent rise and Europe progressed by 4.6 percent.
“Japan is particularly striking,” Luca Solca, managing director at Exane BNP Paribas, said in a research note. “I think a significant price increase in Japan (+9%) helped a lot. Last year Hermès was one of the few not increasing prices in Japan. The integration of franchised stores as direct stores helped too,” Solca said in a follow-up e-mail to WWD.
Officials at Hermès were not available to comment on the figures.
Chief executive officer Axel Dumas said last month that the luxury group was aiming for revenues of 6 billion euros, or $6.5 billion at current exchange, by 2020.
He predicted the weak euro would contribute to an increase in Chinese tourists in Europe this year, but added that Hermès is not ready to tweak prices to rectify the imbalance between prices in the euro zone and China, which he estimated at around 40 percent.
“For the moment, we have not decided either to raise or lower prices. We will look into this perhaps toward the middle of the year or 2016,” said Dumas.
Sales of leather goods and saddlery were up 12.4 percent at constant exchange rates in the first quarter as Hermès continued to ramp up production capacity at two sites in France and began construction on another two new workshops.
Sales of ready-to-wear and fashion accessories rose 9.8 percent during the period; silk and textiles grew 5.9 percent; perfumes nudged up 0.8 percent, and watches were down 3.1 percent. Sales of other Hermès products, which include jewelry and home wares, rose 8.1 percent.
Sales for the luxury house’s other divisions — including John Lobb shoes, Saint-Louis glassware, Puiforcat silverware, Chinese luxury brand Shang Xia and production activities for third parties — were down 14.5 percent in the quarter.
Shares in Hermès closed up 1.1 percent at 339.65 euros, or $368.52, on the Paris stock exchange on Wednesday.