default-output-block.skip-main
BoF Logo

The Business of Fashion

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

Sales Growth at Hermès Picks up Pace in Third Quarter

Sales growth in Asia, Hermes' biggest region by revenues, was stable from one quarter to the next, while demand picked up in Europe and the US.
Hermès store | Source: Shutterstock
By
  • Reuters

PARIS, France — Luxury handbag maker Hermès said sales growth had accelerated in the third quarter, as demand for its perfume and scarf lines proved particularly strong and its performance in Europe and the Americas improved.

The French label, famed for its $10,000-plus Kelly and Birkin bags and squared silk scarves, said revenues stood at €1.34 billion ($1.55 billion) in the July to September period, up 11.3 percent year-on-year on a comparable basis.

Luxury goods companies including France's LVMH and Kering are benefiting from revived appetite from Chinese consumers, boosting their sales this year even as they grapple with a strengthening euro.

That can temper demand from visitors on shopping trips to Europe and also hurt earnings converted into the currency.

Hermès — which makes most of its products, including its handmade bags, in France — said revenues had taken a €25 million ($29 million) hit from currency effects in the first nine months of the year. Sales in that period stood at €4.05 billion ($4.7 billion).

The company reiterated that its first-half operating performance, which saw margins rise to a record high, could not be extrapolated to the full year as the impact of beneficial currency hedges wears off.

But it was upbeat on other fronts, confirming that comparable sales in its leather goods unit, the biggest contributor to earnings, would grow 10 percent in 2017.

Revenues in the division grew at a slightly slower pace in the third quarter compared to the previous three months.

They picked up sharply, however, in the smaller fragrances unit after the launch of Hermès' new Twilly perfume for women, and clothing sales were robust.

Sales growth in Asia, which is Hermès' biggest region by revenues, was stable from one quarter to the next.

"Mainland china enjoyed an acceleration in the sales growth and a very positive momentum, as you can see across the industry," chief executive Axel Dumas told journalists, adding that south Asian countries such as Malaysia had also done well.

Analysts had expected sales across the group to rise by a more muted 8.5 percent on a like-for-like basis, which strips out currency fluctuations. They had grown 8.3 percent in the second quarter.

Hermès shares climbed 1.3 percent in early session trading, with the stock up roughly 15 percent so far in 2017.

"All in all, another solid quarter from Hermès," Rogerio Fujimori, an analyst att RBC, said in a note.

Hermès is hiring staff for new leather workshops to meet demand, and like many rivals it is also trying to improve its online presence. It has relaunched its website in Canada and the United States, while the European version is due next year.

By Sarah White and Pascale Denis; editor: Sudip Kar-Gupta.

In This Article

© 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