Jul 29, 2022
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Sales and profit boom at Hermès in H1, China bounces back at end of period

Jul 29, 2022

Hermès saw a sales boom in Q2 as — like its luxury peers — it enjoyed strong growth in Europe and the US with China also recovering during June towards the end of the quarter.

Hermes - Spring-Summer2022 - Womenswear - Paris - © PixelFormula

Sales in the three months rose 27% on a reported basis and 20% currency neutral to €2.7 billion.

That news came at the company reported its first-half results to the end of June, talking of “very strong growth and exceptional results”.

Revenue in H1 rose 29% at current exchange rates and 23% currency-neutral to hit €5.475 billion, with net profit surging 40% to €1.641 billion, or 30% of sales. Within that, recurring operating income amounted to €2.304 billion (42% of sales). 

Executive chairman Axel Dumas called the results “very dynamic” and said that “in a still unstable context, we are moving forward with confidence.”

Looking at the sales in more detail, on a currency-neutral basis in H1, all geographical areas posted “strong growth, with strong resilience from Asia despite the sanitary context in China”. 

Sales in the group's stores rose 23% and benefited from the strengthening of its omnichannel network and online sales. 

Wholesale was up 25%, an increase that resulted “notably from the resumption of travel retail”, the bounce-back there being good news for all luxury brisknesses as sales at locations like airports are key for them. 

Hermès also said that sales in Asia, excluding Japan, rose 15%, “driven by a high level of activity across the region and by sustained sales in Singapore, Australia and Korea”. Greater China “strongly bounced back in June after being penalised by sanitary restrictions and store closures in April and May, especially in Shanghai and Beijing”. 

The company opened new and revamped stores during the period in the region.

Meanwhile Japan sales rose 20% with the firm talking about “a remarkable performance, thanks to the loyalty of local clients”.

The performance was even better in America with a 34% rise, again helped by new stores such as its third in Texas that opened in Austin during April.

Europe, excluding France, was also up 34% while France itself leapt ahead by 41%. The two performances were helped by “the loyalty of local clients and the return of tourists, particularly in France, the United Kingdom and Italy”.

As for the individual business lines, the company said it saw a “remarkable” increase in some of its divisions. 

Ready-to-Wear and Accessories surged 36%, “thanks to the success of the ready-to-wear, fashion accessories and footwear collections”.

The Silk and Textiles business line saw its sales rising 29% while Perfume and Beauty was up 23% on the back of new product launches.

The Watches business line rose an “outstanding” 55% due to a mix of existing and new products, while the Other Hermès business lines were up 33%, thanks to Homeware and Jewellery. 

The 12% growth of the Leather Goods and Saddlery division may look tame by comparison, but it was still impressive and was driven by “sustained demand and the increase in production capacities, in line with the annual objective”. 

As for the rest of 2022, the company said “the impacts of the health context are still difficult to assess”, but it’s feeling confident. It said that in the medium term, “despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates”.

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