The French luxury fashion manufacturer Hermès turned over more than expected in the second quarter despite comparatively weak growth in the leather goods sector.
Hermès reported a net profit of 1.64 billion euros in the first half, up 39.7 percent year-on-year, thanks to sales growth in all regions, according to a statement published on Friday. The turnover of the saddler and leather goods manufacturer amounted to 5.48 billion euros, which corresponds to an increase of 29 percent compared to the same period last year.
Margin at record level
The operating margin from ongoing business was 42.1 percent, “the highest level in history,” said CEO Axel Dumas. “At this difficult moment, we were lucky to have an extraordinary six months,” said Axel Dumas in a conference call with journalists, “we are approaching the situation with confidence, determination and caution”.
The group’s sales are slightly above the consensus determined by Bloomberg and Factset, which assumed 5.3 billion euros. Revenue in the second quarter reached 2.7 billion euros, up 26 plus.
boom in China
In the first half of 2022, all regions showed very solid development, with Asia holding up well despite the health situation in China. In China, “there was a slump in April, but a very strong rebound in June,” explained Axel Dumas. “We’re not far from making up for the slump (…) At the end of the first half of the year, we have a positive balance sheet in China,” he said without giving further details.
Revenue in the Asia ex-Japan region grew 15 percent, driven by strong momentum across the region – particularly brisk activity in Singapore, Australia and Korea. In Japan, sales increased by 20 percent. Asia as a whole achieved sales of 3.2 billion euros from January to June, which corresponds to an increase of 22.5 percent. America experienced a strong rebound, reaching nearly a billion sales, with a 47 percent increase in revenue. Europe excluding France (+34%) and France (+41%) continued to see growth thanks to local demand and the return of tourists.
Accessories and watches are booming
By the end of June 2021, all business areas maintained their growth. Sales in leather goods and saddlery, Hermès’ core business, rose by 14.9 percent to 1.16 billion euros. Clothing and accessories increased their sales by 50 percent to 710 million euros, perfume and beauty care by 20 percent to 119 million euros, the other Hermès divisions (jewellery and household products) by 44.4 percent to 330 million euros. The watch division jumped 71.5 percent to 134 million.
Axel Dumas stressed: “The group has accelerated job creation and hired more than 800 people, including 600 in France in the first half of the year”. The acceleration of recruitment should continue in the second half to strengthen all areas of the house”. According to the managing director, five new leather goods factories are to be built within five years.
Share in the heights
The stock rose sharply in early trading. Papers from the two luxury goods manufacturers LVMH and Hermès have been among the biggest winners on the stock market for some time. The market value of Hermès has doubled since the end of 2019 to 140 billion euros. The main beneficiary is the founding family, which holds two-thirds of the shares. (dpa / afp)