PARIS — Hermès International added some horsepower to the luxury sector’s rebound Wednesday by reporting organic sales growth of 9 percent in the quarter ended Sept. 30.
This story first appeared in the November 13, 2003 issue of WWD. Subscribe Today.
In reported terms, Hermès sales inched up 0.5 percent in the third quarter to $347.8 million, or 301.9 million euros, versus $346.2 million, or 300.5 million euros, a year ago. Dollar figures are converted from euros at current exchange.
Analysts described it as a “strong” performance, but cautioned that Hermès had an easy basis for comparison last year, when third-quarter sales were down 2.6 percent, as reported.
Nathalie Schneider, luxury analyst at HSBC in Paris, highlighted an acceleration in organic sales — up more than 15 percent in September — and said that bodes well for the fourth quarter, which accounts for about 30 percent of Hermès’ sales and a larger percentage of its annual profits.
“The group is well on track to achieve its target of a 5 percent organic sales growth over the full year,” she wrote in a research note. “When the cycle turns up, Hermès should again start exceeding expectations significantly, given its high operating leverage.”
By product category, leather goods remained the engine of the group, with third-quarter sales of bags and travel items jumping 19.3 percent at constant exchange. Sales of perfumes advanced 6.4 percent; ready-to-wear, 5.4 percent, and silks, 2.3 percent. Watches remained a tough category, with sales dropping 12.7 percent at constant exchange.
By geographic region, sales bounced back strongly in Asia, increasing 12.2 percent at constant exchange in the quarter. Analysts attributed the rebound in the Asia-Pacific region, up 17.8 percent, to a tourist climate rapidly improving after the outbreak of the killer pneumonia, SARS, earlier in the year. But Antoine Colonna, analyst at Merrill Lynch in Paris, expressed disappointment in the 9 percent sales rise in Japan, which was below his expectations.
In the Americas, Hermès sales were up 14.4 percent at constant exchange. Meanwhile, in Europe, which had been slammed with a heat wave and weak tourism over the summer, sales grew 5.5 percent at constant exchange. Sales lagged in France, with only a 1.7 percent uptick.
For the nine months, Hermès reported that sales slipped 3.9 percent to $980.5 million, or 851.1 million euros, from $1.02 billion, or 885.6 million euros, a year ago. At constant exchange, that amounts to a 5.2 percent increase.
Like most French companies, Hermès reports sales and earnings separately and gave no guidance on profits in the third quarter. Shares of Hermès International rose 0.2 percent in trading Wednesday to close at $179.83, or 156.10 euros, on the Paris Bourse.