Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Hermès First-Half Profits Hit Record Levels

The luxury goods house warned second-half results may slow, but said it was keeping an 'ambitious' medium-term goal for revenue growth despite growing economic and geopolitical uncertainties.
Hermès store, Monte Carlo | Source: Shutterstock
By
  • Reuters

PARIS, France — French luxury goods maker Hermès said its first-half operating margin climbed to a record high of 34.3 percent of sales, although it struck a note of caution over the impact of the euro's strength.

Chief executive Axel Dumas said the first half performance could not be extrapolated to the full year even though the company was "fully hedged" against a stronger euro in 2017.

There could therefore be a negative impact from a stronger euro on 2018 profits, Dumas said on a call with journalists.

"We try to be ambitious but are cautious in a very volatile environment," Dumas said.

ADVERTISEMENT

Hermès, known for its $10,000 Birkin bags and $400 printed silk scarves, said operating income from recurring operations rose 13 percent to a record high of €931 million (£837.67 million) in the first-half of 2017, on the back of strong sales.

Hermès also reported a boost from favourable foreign exchange hedging contracts set up in 2016.

The first-half 2016 operating margin had stood at 33.9 percent of sales.

In July, Hermès reported a 9.7 percent rise in revenue at constant exchange rates to €2.713 billion, thanks to a robust performance at its leather goods division, which makes up 50 percent of group sales.

The luxury goods industry has suffered in the past couple of years as demand in China had slowed down, while a series of deadly attacks in France from Islamist militants had deterred some tourists from travelling to Europe.

Yet Hermès, and its rivals in the luxury industry such as LVMH and Kering, have started to signal better demand in mainland China and improving tourist spending in Europe.

Hermès said it was keeping an "ambitious" medium-term goal for revenue growth at constant exchange rates despite growing economic and geopolitical uncertainties.

By Dominique Vidalon; editor: Sudip Kar-Gupta.

In This Article
Organisations

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

The Best of BoF 2023: Diversity’s Litmus Test

In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.


The Year Ahead: The Future of Fashion Deal-Making

For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.


The Investment Giant Behind Some of Fashion’s Biggest Deals

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections