Hermès sales jump on ready-to-wear and leather bags
Hermes International sales jumped in the first quarter as consumers spent more on the company’s ready-to-wear clothes and leather bags.
Revenue rose 27% at constant exchange rates to 2.77 billion euros ($3.02 billion) in the first three months of the year, bag maker Birkin said in a statement on Thursday. communicated. Analysts were expecting a 15% gain.
The ready-to-wear line was the best performer, growing 44%, more than double estimates. Growth at its largest leather goods and saddlery unit also exceeded expectations. Shares rose 4.6% in early trading in Paris.
As of Thursday, three of the company’s 26 stores in China were closed due to shutdowns. All three stores are in Shanghai, chief financial officer Eric du Halgouet told reporters on a call. Activity in China was buoyant between the start of the year and the arrival of the shutdowns at the end of March, he said, adding that “the fundamentals are exceptional in China”.
To relaunch production, Hermès announced plans last month to open two new leather goods workshops in France for 2025 and 2026, which will create 500 jobs. This is in addition to three other sites scheduled to open within the next 3 years to address supply constraints. Hermès still aims to increase leather goods volumes between 6% and 7% per year, du Halgouet said.
Hermès is in close contact with its staff in Russia where its three Moscow stores closed last month following the invasion of Ukraine, du Halgouet said.
Russia accounts for less than 1% of the group’s total sales, he said. The company had planned to open a store in St. Petersburg in June, but that is now on hold, he said.
Hermès has already implemented price increases of 3.5% on average at the start of the year amid inflationary pressures, and may raise prices for its jewelry and watch lines in the middle of this year to compensate. rising precious metals costs, du Halgouet said. He expects higher prices in 2023.
Hermès’ results follow those of rival European luxury goods maker LVMH earlier this week, which warned analysts that lockdowns in China were having a negative impact on sales, although it did not quantify the drop. .