Hermes sales lifted by robust growth in US, Asia

BIRKIN bag maker Hermes posted a 22.9 per cent rise in fourth-quarter sales and flagged “no fundamental change” in trends in China despite Covid-19 disruptions over the period.

European luxury brands 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 (Feb 17): “We continued to see strong desirability in China over the fourth quarter.”

The company did not give a breakdown of its sales in China.

Globally, sales for the three months to Dec 31, 2022 came to 3 billion euros (S$4.3 billion). A Visible Alpha consensus showed that this outpaced analysts’ expectations for 17 per cent growth at constant rates.

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

In the US, where the company opened a sprawling store on Madison Avenue in New York in September 2022, sales jumped by 40.8 per cent. The performance marked a contrast with some rivals that experienced weaker sales there as business shifted to Europe, with travelling Americans taking advantage of the strong greenback.

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

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The company said it created 4,300 jobs, including 2,900 in France, over the past three years, with plans to hire more people this year. It cited rising labour costs as the reason behind its recent price hikes of around 7 per cent, implemented in January.

Big luxury names such as Chanel and Louis Vuitton raised prices over the past several years, while Hermes made more slight adjustments. UBS estimated that Louis Vuitton raised prices by 9.6 per cent in 2020 and 3.7 per cent in 2022. Hermes’ price hikes in those years, meanwhile, were 1 per cent and 2.1 per cent, respectively. REUTERS