Hermes quarterlies highlight recovery in luxury-goods market
QUARTERLY results from Hermes International have added to the evidence that the luxury industry is recovering, as shoppers in China and Japan buy more silk scarves and Birkin handbags, while tourists who were deterred by terrorism return to its stores in Europe.
Revenue climbed to €1.5 billion (R21.4bn) in the fourth quarter, the Paris-based company said yesterday, meeting analysts’ expectations.
“I see an improvement in China and much higher appetite for our industry generally since the second half,” chief executive officer Axel Dumas told reporters. “I remain optimistic for China. We see a lot of appetite for a diverse range of our products, from shoes to ready-to-wear, bags and silk.”
Hermes joins other luxury-goods companies in reporting improvements after the industry suffered through several years of ebbing demand in China and a slowdown in tourism in Europe after terrorist attacks. Christmas-season sales and earnings at Louis Vuitton owner LVMH beat analysts’ estimates, while British trenchcoat-maker Burberry Group said business in the Asia-Pacific region is rebounding.
Hermes says leather sales increased 8.5 percent, while silk ties and scarves recovered in the Christmas season.
Richemont, the maker of Cartier jewellery and IWC Schaffhausen timepieces, reported a return to growth.
Hermes said leather-goods sales increased 8.5 percent, while silk ties and scarves recovered in the Christmas season, with growth of 11 percent.
Dumas said that while the silk and textiles business benefited from easier comparisons, growth was returning in France and China. The unit had been particularly affected by the terrorist attacks.
“Tourism in France is better than last year but is not yet at the level it used to be,” Dumas said. “I see some recovery. The other countries in Europe did well, especially Italy and the United Kingdom.”
For the year, revenue growth was 7.4 percent, the slowest annual increase in at least five years. Hermes in September abandoned a mid-term annual forecast for sales growth of about 8 percent, saying it aims for “ambitious growth”.
The company said its operating margin improved slightly in 2016. The company will report its full-year earnings on March 22. – Bloomberg