default-output-block.skip-main
BoF Logo

The Business of Fashion

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

Hermès Still Benefiting From Buoyant Asian Demand

Along with Louis Vuitton and Gucci, Hermès is still riding high on strong demand from Asian clients with net profit up 15 percent to €1.4 billion and operating income up 6 percent to €2 billion.
Hermès store, Monte Carlo | Source: Shutterstock
By
  • Reuters

PARIS, France — Upmarket handbag maker Hermès, one of the luxury brands still riding high on strong demand from Asian clients, said on Wednesday it had not observed any change in sales trends so far this year.

The French label, known for its squared silk scarves and Birkin handbags that sell for more than $10,000, posted a 15 percent rise in net profit for 2018 to €1.4 billion (£1.20 billion). Operating income rose 6 percent to €2 billion.

A US-China trade war has raised fears that firms heavily reliant on Chinese demand will suffer as the mood among consumers sours, though some luxury labels appear to have retained their appeal as younger shoppers seek out branded goods.

"There is no trend change at this stage," chief executive Axel Dumas told journalists. Hermès remained cautious for 2019 but was confident about its longer-term prospects.

Hermès had already reported 10 percent comparable sales growth for the fourth quarter, with revenue expanding in Asia Pacific at a quicker pace than in the previous three months.

Along with rivals such as LVMH's Louis Vuitton, and Kering's Gucci and Balenciaga brands, it is one of the high-end labels still profiting from thriving Chinese demand and a mostly benign industry backdrop globally.

Dumas said all of its divisions, which also include perfumes and watches, were still performing well globally in terms of sales volumes in the first few months of the year, though the silk unit remained in a phase of moderate growth after revenue expanded at a slower clip last year.

Hermès was increasing its prices globally by 3 percent in 2019, Dumas added, to adjust for increased production costs.

Margins reached 34.3 percent of its sales in 2018, a slight dip from the record reached a year earlier as rises in production costs outpaced those of its merchandise, although they remain among the highest in the industry.

By Sarah White and Pascale Denis; editors: Sudip Kar-Gupta and David Holmes.

© 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.

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.


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.



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 Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024