Hermes Second-Quarter Sales Rise Above-Forecast 8.1%
Luxury goods maker Hermes (HESAY) comfortably beat market expectations in the second quarter as revenue from most of its product lines picked up.
In the three months through June 30, the Paris-based company saw revenue advance 8.1% year-on-year to €1.25 billion ($1.38 billion) on a constant currency basis. That was well above a Bloomberg consensus expectation for a 5.6% sales increase.
Revenue was driven not only by the leather goods and saddlery business, which saw 17.1% year-on-year growth in the quarter, instead of the 13% tipped by the analysts polled by Bloomberg, but other lines too. Four of Hermes seven segments saw year-on-year sales rise, with perfume sales rising 11.3% and watches up 4.2%.
Hermes appears to be faring better than several luxury retail peers, as the sector contends with security worries, and a slowdown in the Chinese tourist destinations of Hong Kong and Macau. London-based BurberryBURBY on July 13 said same-store sales in the three months to June dropped 3%.
In the second quarter year-on-year sales fell 1.5% for ready-to-wear fashion accessories, declined 4.2% for silk and textiles and dropped 0.9% for "other Hermes sectors," which include jewelry and home wares. But the declines narrowed from the first quarter.
By region, the Americas saw the greatest growth, of 12.1%, followed by "other" regions, up 11.7%, Europe, up 7.7%, and Asia, up 6.9%. Within Europe, sales in France jumped 8.9%, while in Asia, sales in Japan advanced 7.3%. The company didn't give a figure for China.
In 2015 Asia Pacific accounted for 47% of group sales, Europe 33%, and the Americas 18%, according to its annual report.
In the first six months, sales advanced 7% to €2.44 billion.
The company attributed growth for the first half to investment in and extensions of stores last year in the Americas, as well as distribution strategies taken in Japan. In Asia outside of Japan, "challenging" conditions in Hong Kong and Macao were offset by store extensions and renovations in Singapore and continued growth in mainland China. European stores showed "resistance" despite the impact of recent events, the company said, apparently referring to recent terrorist attacks in Paris, Brussels and elsewhere.
Currency fluctuations hurt revenue by €25 million, the company added.
For the full year, the company reiterated that it could miss its medium-term revenue growth target of 8% on a constant currency basis, due to "economic, geopolitical, and monetary uncertainties around the world."
Hermes' shares recently advanced 3.4% to €366.10.