Hermes Seeks Growth by Outfitting Luxury Lifestyles From AfarBy
Hermes adds $40,000 watches, $6,000 saddles to website
Luxury industry tries to maintain growth after 2017 boom
After last year’s luxury boom, Hermes International wants to maintain the momentum with a revamped website that lets well-heeled shoppers buy everything from $600 silk scarves to $6,000 jumping saddles without leaving the Jackson Hole ranch.
Growth eased for Paris-based Hermes during the holiday season as the French luxury-goods maker ran low on leather items. Fourth-quarter sales rose 4.6 percent at constant exchange rates, less than half the rate of the previous three months, the company said Thursday.
After double-digit sales gains in 2017, makers of high-end goods face tougher comparisons against a year earlier, when a rebound fueled by pent-up Chinese demand was gaining hold. Hermes says it can maintain expansion as it ramps up production of leather goods and upgrades its store network with new outlets such as a three-story flagship in Hong Kong.
The stores sell everything from fine china to Swiss timepieces, but the company’s online selection has been more limited. Now it’s aiming to help customers splash out with a new website introduced in North America last year and set to roll out in Europe and China in 2018. It’s easier to navigate on mobile devices and will shine a light on a broader range of products, Chief Executive Officer Axel Dumas said on a call with reporters.
“It was always very important to have all our metiers in all of our stores, and online that was a frustration,” Dumas said, using the French word for crafts. The new site is already attracting new customers and a higher percentage of those who visit are buying items, he said.
While some luxury brands were initially skeptical about the potential for ecommerce, online sales rose 24 percent last year, according to consultancy Bain & Co. That’s sparked moves like Richemont’s offer to buy out shareholders in Yoox Net-A-Porter Group SpA for 2.7 billion euros ($3.3 billion).
Hermes was a pioneer in luxury e-commerce when it started to sell online in 2001, but the website had stuck to a more limited selection and was slow to adapt to the smartphone age. Under the new push, the company will even send clients a $40,000 watch via FedEx.
Hermes is Europe’s most profitable listed luxury company, with an estimated margin of 33 percent on its earnings before interest and taxes for 2017, according to HSBC. Hermes on Thursday raised its guidance for profitability, with Dumas saying hedging contracts helped delay the impact of a higher euro.