Economic news

Hermes Sales Lifted by Robust Growth in U.S., Asia

PARIS, Feb 17 (Reuters) - Birkin bag maker Hermes posted a 22.9% rise in fourth quarter sales, lifted by brisk business in the United States, and flagged "no fundamental change" in trends in China despite COVID-19 disruptions over the period.

European luxury brands have benefited from a strong, post-pandemic rebound as shoppers drew on savings during lockdowns to treat themselves to designer label fashion.

Much of the industry however took a hit in China, the world's second-largest economy, at the end of last year, due to lockdowns and the country's subsequent exit from its zero-COVID policy, which caused a surge of infections.

But Hermes executive chairman Axel Dumas told analysts on Friday: "We continued to see strong desirability in China over the fourth quarter."

Hermes did not give a breakdown of its sales in China.

Globally, sales for the three months to end-December came to 2.99 billion euros, outpacing analyst expectations for 17% growth at constant rates, according to a Visible Alpha consensus.

"Hermes has ploughed through the Covid-19 related issues in 4Q22, and produced a very solid beat to consensus," Bernstein analyst Luca Solca said.

In the United States, where the company opened a sprawling store on Madison Avenue in New York in September, sales jumped 40.8%.

The performance marked a contrast with some rivals that experience weaker sales there as business shifted to Europe, with travelling Americans taking advantage of the strong dollar.

Hermes said it would propose a dividend of 13 euros per share at its next general meeting on April 20th.

The company said it has created 4,300 jobs, including 2,900 in France, over the past three years, and plans to hire more people this year.

It cited rising labour costs as the reason behind its recent price hikes of around 7%, implemented in January.

Big luxury names like Chanel and LVMH's Louis Vuitton have been raising prices over the past several years, maintaining the exclusivity of their brands, while Hermes had made more slight adjustments.

UBS estimates Louis Vuitton raised prices by 9.6% in 2020 and 3.7% in 2022, compared to Hermes' price hikes of 1% and 2.1% those years.

Reporting by Mimosa Spencer Editing by Ingrid Melander

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree