The French luxury group Hermes wants to let its shareholders participate in last year’s earnings growth with a special dividend. In addition to the general distribution, a bonus of 10 euros per share is planned, the company announced on Friday in Paris. While Gucci owner Kering had reported weakening demand the day before, Hermes managed to continue to benefit from the desire to buy luxury goods in 2023. And CEO Axel Dumas was just as confident about the future. The stock rose to a record high.
Analysts unanimously praised the figures. The results were better than expected. Jefferies analyst Chiara Battistini pointed out that there had been some discussions in the current reporting season as to whether the growth of luxury brands was coming to an end and whether the companies would have to reduce their cost base. But for them, Hermes provides evidence to the contrary: the brand dynamics are strong across all product categories and regions, the costs are incurred in the right places and the shareholder returns are consistently attractive.
Based on constant exchange rates, Hermes’ sales rose by a fifth to 13.4 billion euros in 2023. This means that growth weakened somewhat compared to the previous year. However, all regions and business areas – from leather goods and silk textiles to cosmetics, watches and fashion – contributed double-digit percentages. Operating profit rose by around a fifth to almost 5.7 billion euros in 2023. The bottom line is that Parisians earned 4.3 billion euros, 28 percent more than the year before.
CEO Dumas reported that during his recent visit to China in the fourth quarter he noticed lower volumes in the shopping centers. However, this did not affect the company’s sales performance.
Growth is expected to continue in the future. Management continues to assume that sales, adjusted for currency effects, will increase in the medium term. This goal endures, "regardless of the economic, geopolitical and monetary uncertainties around the world".
And they are also optimistic for 2024: Hermes is heading into the new year with confidence, the statement said. CEO Dumas announced price increases of an average of 8 to 9 percent for 2024 in a telephone conference. As usual, the company did not provide any further earnings targets.
Even if the demand boom from the period after the corona pandemic has now cooled down somewhat, some companies are still managing to keep their high-priced products attractive. Similar to Hermes, the figures presented by LVMH
and Richemont witnessed robust business. Burberry and KeringHowever, companies that are in the process of restructuring performed less well. (dpa)