Hermès (Hermes), the French luxury goods group, announced its earnings report for the first half of the fiscal year on Thursday, with sales performing better than analysts expected.
In the second quarter, some of Hermès' financial data are as follows:
Sales reached 1.25 billion euros, up 6.2% year-on-year at current exchange rates, and 8.1% year-on-year at constant exchange rates, better than analysts' 5% growth forecast.
Due to the impact of the sharp exchange rate fluctuations at the end of June, the Group’s sales in the first half of the fiscal year decreased by 25 million Euros.
Due to the favorable impact of foreign exchange hedging contracts, the operating profit margin is expected to increase by 1% year-on-year.
At constant exchange rates, Hermes' performance in various markets is as follows:
Despite the sharp drop in the number of European tourists due to terrorist attacks, French sales continued to grow by 8.9% year-on-year, accounting for 14% of total sales, driven by strong local demand.
New stores opened in the last fiscal year, as well as the renovation of existing stores, sales in the Americas increased by 12.1% year-on-year
Sales in Japan increased by 7.3% year-on-year
Sales in other European countries except France increased by 6.7% year-on-year
Sales in Asia, excluding Japan, increased by 6.7% year-on-year. Singapore’s Liat Towers reopened in May, which boosted sales. Despite the weak sales performance in Macau and Hong Kong, Greater China has achieved growth.
Calculated by constant exchange rate, the specific performance of each commodity classification is as follows:
Sales of leather products increased by 15.2% year-on-year, the highest among all product categories. In April of this year, the 15th factory opened in France (see "Glory" for the previous report: Hermès opened its 15th factory in France, specializing in Kelly handbags), which promoted the sales of leather products.
Sales of ready-to-wear and accessories products decreased by 3.9% year-on-year
Affected by terrorist attacks and weak performance in Greater China and the US market, sales of silk and fabric products fell by 6.5% year-on-year. Terre d'Hermès (above) men's fragrances sold well, as well as colognes Eau de néroli doré and Eau The launch of two new fragrances, de rhubarbeécarlate, helped to increase the sales of perfume products by 11% year-on-year.
Watch sales increased by 2.1% year-on-year, but the market environment in Asia except Japan is very severe.
Sales of other types of goods fell by 3% year-on-year
In the conference call, Hermes CEO Axel Dumas said: "Because France is currently in a state of emergency, the number of tourists will not be able to recover in the short term. The terrorist attacks have had a great impact on France."
Due to the terrorist attacks in Brussels, the number of tourists in the French region has fallen sharply, which has led to the impact of sales of many luxury brands. After the terrorist attack in Nice last week, France extended the national emergency for six months.
In addition, Dumas also said that it is uncertain about the impact of Brexit on Hermès, but the UK market is not high in Hermes' overall business.
Rogerio Fujimori of the Royal Bank of Canada Capital Markets Department said: "Overall, Hermès performed very well in the first half of the fiscal year."
Hermes' forecasts for the second half of fiscal 2016 and for fiscal year 2016 are as follows:
It is expected that sales of leather products will slow down in the second half of the year compared to the same period last year.
At the constant exchange rate, the sales growth of leather products for the full year of FY2016 is expected to be around 12%.
Due to “the instability of the world economy, political and financial environment†and the constant exchange rate, it is expected that the sales growth for the whole year of 2016 will be lower than the company’s medium-term target of 8%.
The detailed first half of the Hermes Group data will be released on September 14.
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