Hermès International said net profit rose 7 percent in the first half as the French luxury brand shrugged off U.S-China trade tensions to post healthy growth in Asia and other regions.
Net profits amounted to 754 million euros in the first six months of the year. Meanwhile, recurring operating income rose 15 percent to 1.14 billion euros, propelling the recurring operating margin to 34.8 percent, above the company’s guidance and close to the record 34.9 percent posted in the first half of 2018.
“Hermès registered strong earnings growth over the first half of 2019, reflecting our customers’ loyalty in all markets and the creative excellence that drives all business lines,” Axel Dumas, chief executive officer of Hermès, said in a statement.
The company repeated its target of “ambitious” revenue growth at constant exchange rates in the medium term.
Rogerio Fujimori, analyst at RBC, said the operating profit implied stable profitability year-on-year, with strong sales growth allowing Hermès to offset the negative impact of foreign exchange hedges.
“In summary, no major surprises here,” he said in a research note. “Hermès offers the strongest long-term fundamentals and the most resilient earnings profile in our luxury coverage.”
As reported, sales at Hermès International climbed 14.7 percent to 1.67 billion euros in the second quarter, beating expectations. Business in Hong Kong continued at a double-digit growth rate during the three-month period, despite the closure of two stores for two half-days in June, it reported.
Revenues for the quarter were up 12.3 percent at constant rates, with particularly brisk growth in Asia-Pacific, up 18.6 percent. The group flagged positive momentum in mainland China, along with double-digit growth in all countries of the region, pointing to recent store openings in Shanghai, Singapore and Thailand.
At the end of this month, the company will add a store in Xiamen, on China’s southern coast. Hermès is also rolling out its digital platform in the area, with Singapore up next, slated for the end of the year, following Japan in June.
This story was reported by WWD and originally appeared on WWD.com.