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Feb 17, 2023
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Hermès has strong Q4 and year as fashion ops and watches boom

Feb 17, 2023

Luxury giant Hermès on Friday reported a 22.9% jump in Q4 sales as the US boomed and sales in China held up, despite Covid challenges.

HERMES - Fall-Winter2022 - 2023 - Womenswear - France - Paris - © ImaxTree

The last three months of the year saw sales of €2.99 billion, beating analysts’ estimates. And the company remains upbeat, even against the backdrop of “economic, geopolitical and monetary uncertainties around the world”, saying that it has “an ambitious goal for revenue growth at constant exchange rates”.

For the year as a whole, it said consolidated revenue rose 29% (or 23% at constant exchange rates) to €11.602 billion. 

Recurring operating income was 40.5% of sales at €4.697 billion, up from €3.53 billion and 39.3% of sales a year earlier. And net profit reached €3.367 billion, representing net profitability of 29%. That’s up from €2.445 billion a year ago when net profitability was 27.2%.

Executive chairman Axel Dumas said: “Hermès had an exceptional year thanks notably to the good performance of its international markets. This success reinforces our approach as an artisanal and highly integrated company, mainly in France: a design house that offers objects conceived to be functional, with an assertive style and uncompromising quality. The year underpins the relevance of our responsible and sustainable model.” 

Looking in more detail as the sales story (all figures at constant exchange rates), it said sales increased “considerably” both in group stores (+23%) and in wholesale (+26%), which benefited from the recovery in travel retail. Hermès continued to develop its exclusive distribution network, while online sales “pursued their upward trend worldwide”.

Asia (excluding Japan) was up 22% and “remained very dynamic throughout the geographical area”. And sales in Greater China were “sustained”. The company had opened new store in China, one in South Korea and reopened several more after renovation and extension work.

Japan meanwhile was up 20% and “recorded a steady, sustained increase in sales”. This should continue as, in November, the Takashimaya store in Nagoya reopened after renovation and extension.

Hermès - Reuters

As mentioned, The Americas performance (+32%) was a particular success story, helped by new stores in Austin and New York. It also reopened its revamped Guadalajara, Mexico location.

Europe (excluding France) couldn’t match either Asia or The Americas, but with sales up 18%, it was a good result. The company said tourism is returning and “the loyalty of local clients” was also key.

Meanwhile, France was strong with a 27% sales rise and it saw “an acceleration at year-end thanks to high demand from both national and international clients”.

The company’s sales by business line also looked impressive with Ready-to-Wear and Accessories, Watches and ‘Other’ all “posting a remarkable increase”. 

The Leather Goods and Saddlery business line wasn’t quite so remarkable but at least its 16% sales rise meant it performed “particularly well”, although it was helped by easy comparisons in Q4. 

The big numbers were seen at The Ready-to-Wear and Accessories division (+36%) as its collections went down well both on the runway and in its stores. 

Even bigger was growth at Watches (+46%), while its ‘Other’ business line that includes Jewellery and Homeware rose a healthy 30%.

The company said the 20% jump at the Silk and Textiles business line was “splendid, supported by the growth in production capacities. 

Meanwhile Perfume and Beauty (+15%) gained on the back of new launches and it said that two years after its creation, the Hermès Beauty business line “continues its strong growth”.

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