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Hermès Beats Sector Peers With 12.3% Q4 Sales Rise
February 19, 2021
PARIS – Hermès International said sales rose 12.3 percent in the fourth quarter, sharply outperforming its sector peers as strong growth in Asia-Pacific compensated for continued weakness in Europe and a flat performance in the Americas.
Revenues totaled 2.1 billion euros in the three months to Dec. 31, representing an increase of 15.6 percent in comparable terms. By comparison, sector leader LVMH Moët Hennessy Louis Vuitton reported a 3 percent decline in organic sales in the fourth quarter, while revenues at Kering were down 5 percent in like-for-like terms.
The group plans to pay an exceptional bonus of 1,250 euros to its 16,600 employees in 2021 “for their commitment and contribution to results.”
Net profit fell 9 percent in 2020 to 1.38 billion euros, while recurring operating income was down 15 percent to 1.98 billion euros. The recurring operating margin improved strongly in the second half of 2020 to reach 31 percent on a full-year basis.
The French luxury group confirmed its guidance for “ambitious” revenue growth at constant exchange rates in the medium-term, although it said the immediate outlook remains uncertain.
“For 2021, the impacts of the COVID-19 epidemic are currently difficult to assess, as the scale, duration and geographic extent of the crisis evolve every day,” it said in a statement.
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Sales in Asia-Pacific jumped 47.4 percent at constant exchange rates in the fourth quarter, while revenues in Japan rose 15.6 percent. Europe was down 9.7 percent, with France sinking 18.2 percent during the crucial holiday period as the country’s second lockdown kept stores closed during the month of November.
Sales in the Americas inched up 0.1 percent.
Revenues in the group’s stores rose 21 percent in the last three months of the year as Hermès maintained a vigorous pace of store openings and renovations, and continued the rollout of its new e-commerce platform in Asia and the Middle East.
In the U.S., the Wynn Plaza store in Las Vegas was extended and renovated in October, followed by the Short Hills store in New Jersey in November. In Europe, a new boutique opened in Madrid in the Galería Canalejas in October, and the flagship in Stockholm was renovated and extended.
Revenues in the leather goods and saddlery division jumped 17.6 percent in comparable terms in the fourth quarter, and Hermès continued to expand its production capacities in France to keep pace with demand for its signature Kelly and Birkin handbags.
Sales of ready-to-wear and accessories were up 12.3 percent, and watches rose by 28.4 percent. Other Hermès sectors, a division that includes jewelry and home wares, posted a 55.8 percent rise.
Silk and textiles were down 1.9 percent, and perfumes lost 9.1 percent, reflecting the continued dearth of tourists, as silk scarves and fragrances are more exposed to variations in travel retail.
“The solidity of our results reflects both the desirability of our collections and the agility of our craftsmanship model. I am proud of the work accomplished by all Hermès employees, who have shown courage, solidarity and commitment, and I thank our customers for their loyalty all over the world,” said Axel Dumas, chief executive officer of Hermès.
The group safeguarded the jobs and salaries of its staff throughout the coronavirus pandemic without resorting to government aid, it noted.