The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
PARIS, France — French luxury handbag maker Hermès International reported a 10 percent jump in full-year profit, boosted by Asian sales of leather goods and Birkin handbags and as tourists return to its stores in Europe.
Operating profit climbed to 1.7 billion euros ($1.8 billion) on an adjusted basis, the Paris-based company said Wednesday in a statement, in line with the average analyst estimate. The profit margin widened to a record 32.6 percent of sales from 31.8 percent in 2015.
The luxury industry has been reporting signs of improvement after years of ebbing demand in China and a slowdown in European tourism. Tiffany & Co. reported higher-than-expected earnings last week, helped by new stores in Asia and higher-priced jewelry. Gucci owner Kering SA has reported its fastest revenue growth in four years.
Hermès is facing a gradual slowdown in sales growth after outperforming rivals in past years, helped by its product range, which is one of the most exclusive among listed luxury-goods makers. Revenue increased 7.4 percent in 2016 at constant exchange rates, the slowest pace in seven years, the company said last month. In September, Hermès abandoned a mid-term annual forecast for sales growth of about 8 percent, replacing it with a goal for "ambitious" growth.
Shares of Hermès have risen 38 percent in the past year, outpacing the 12 percent increase in a Bloomberg Intelligence index of luxury-goods stocks.
This week, more luxury brands will report first-quarter results, offering clues as to how broad and how deep the downturn is going to get.
Fashion brands are edging in on the world’s largest gathering of design professionals and their wealthy clients, but design companies still dominate the sector, which is ripe for further consolidation, reports Imran Amed.
Blocking the deal would set a new precedent for fashion M&A in the US and leave Capri Holdings in a precarious position as it attempts to turn around its Michael Kors brand.
After preserving his fashion empire’s independence for decades, the 89 year-old designer is taking a more open stance to M&A.