Hermès Revenues Jump 15.4% In Q3

Hermes-Boots
Lennox men's sneaker by Hermès.
Hermès.

“Dynamic” sales of ready-to-wear and fashion accessories contributed to a 15.4 percent jump in third-quarter sales at Hermès International.

Revenues for the three months ended Sept. 30 reached 1.14 billion euros, or $1.27 billion, a 7.9 percent gain stripping out the impact of currency fluctuations.

“All in all, a reassuring performance from Hermès against a more difficult backdrop in Asia and Americas,” Rogerio Fujimori, luxury analyst at RBC Europe Limited, wrote in a research note. “When things get tough, the best business models and most exclusive brands stand out.”

Indeed, the gains outpaced rivals LVMH Moët Hennessy Louis Vuitton, which posted a 7 percent improvement in Q3, Kering 12 percent, and Burberry, which shocked markets by reporting that same-store sales fell 4 percent in its financial second quarter.

Hermès confirmed its revenue target of 8 percent growth at constant rates for 2015 “despite the economic, geopolitical and monetary uncertainties around the world.”

It also reiterated that operating profits would come out lower than 2014 due to the “diluting impact of currency fluctuations.”

The maker of Birkin bags and silk scarves trumpeted sales gains across all regions in the third quarter with Japan up 16.6 percent at constant exchange, Europe 14.8 percent, the Americas 2 percent and Asia excluding Japan 1.5 percent.

The opening of the Maison Hermès in Shanghai in September 2014 helped offset “a difficult context in Hong Kong, Macao and to a lesser extent in continental China,” Hermès noted.

By product category, sales in Q3 were up 8.6 percent for leather goods and saddlery at constant exchange rates thanks to an increase in production capacity at two new sites in Isère and Charente, Hermès said, also noting that a new workshop in the  Franche-Comté region is “up and running and investments on a second site are ongoing.”

Sales rose 11.9 percent for rtw and accessories, and 10.7 percent in perfume. Silk and textiles slipped 0.5 percent, reflecting a “challenging context” in Greater China.

Difficulties in that region also dented watch sales, which fell 5.2 percent in the quarter, “penalized by wholesale business on a still difficult market, particularly in Asia excluding Japan.”

Consolidated revenues for the nine months totaled 3.44 billion, or $3.84 billion, up 18.8 percent in reported terms and 8.5 percent at constant rates.

Hermès noted that that currency tailwinds added 298 million euros, or $332.3 million, to revenue tallies at the end of September.

Dollar figures are converted from euros at average exchange rates for the periods in question.