Hermes Boosts Sales 24%, Raises Forecast Amid Asia Growth
Hermes International SCA (RMS), the French maker of Birkin bags and silk scarves, reported third-quarter sales that beat analysts’ estimates and raised its 2012 revenue growth target to more than 13 percent on surging demand in Asia.
Sales advanced 24 percent from a year earlier to 848.6 million euros ($1.08 billion), the Paris-based company said today in a statement. The average of four analysts’ estimates compiled by Bloomberg was 803.8 million euros. Excluding currency swings, sales rose 16 percent.
Luxury goods makers such as Burberry Group Plc (BRBY) are raising prices and eliminating their cheapest lines to nudge their image upscale as demand falters. The so-called absolute luxury segment where Hermes competes is the fastest-growing part of the market and will keep outperforming the rest until at least 2014, Bain & Co. has predicted.
Hermes, whose Birkin handbags sell at prices starting from 5,500 euros, said in August that 2012 revenue may grow about 12 percent, excluding currency swings. If current trends continue, the figure may exceed 13 percent, Hermes said today. It maintained guidance for the operating margin to be between the 2010 level and the record high achieved in 2011.
Sales in Asia, excluding Japan, are “showing no clear sign of deceleration,” Thomas Mesmin, an analyst at CA Cheuvreux in Paris, said in a note to investors. Revenue climbed 22 percent in the Asia Pacific region, excluding Japan, where they rose 4.3 percent on the same basis, rebounding from the previous quarter, Hermes said.
The French company’s shares rose as much as 2.6 percent and were up 2.1 percent at 223.95 euros as of 9:08 a.m. in Paris.
Hermes had a “stellar” performance in France that was largely responsible for results that exceeded Mesmin’s expectations, he said. Sales rose 14 percent in the rest of Europe excluding currency swings, and at the same rate in the Americas.
Sales of leather goods, Hermes’s largest product category, rose 11 percent, while revenue from ready-to-wear and fashion accessories surged 21 percent. Silk and textiles sales gained 14 percent, as did perfumes, while tableware increased 18 percent and watches climbed 6.2 percent.
Hermes said it didn’t buy back any of its own shares in the third quarter. LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury goods maker, owns 22.3 percent of Hermes, according to data compiled by Bloomberg.
Hermes Chief Executive Officer Patrick Thomas said in September that the company had yet to be affected by the weakening world economy.
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