Hermes expects slower sales in 2015

France
Published:  12 February, 2015

Hermes International said on February 12 that its fourth-quarter sales increased 12% partly because of strong demand from U.S shoppers, but the French luxury company expects sales growth to slow in the coming year.

Hermes said it sold €1.22 billion ($1.38 billion) worth of goods during the fourth quarter, up from €1.1 billion in the same period in 2013. Excluding currency fluctuations such as the weakening yen, sales would have increased 9.6%, a slight slowdown from earlier in the year as demand from Chinese shoppers was subdued by political turmoil in Hong Kong.

For the coming year, which the company said it wants to look "with the eye of the flaneur," Hermes expects 8% growth in revenue, down from an 11% increase this year, citing "economic, geopolitical and monetary uncertainties over the world."

The company hasn't yet reported profit figures for 2014, but said it expects its margin to slide slightly to about 31% when it reports full-year earnings.

Hermes has long stood apart from other luxury brands such as Louis Vuitton and Gucci, and is often perceived by shoppers as the apex among the exclusive club. The company has tried to maintain this allure by ensuring coveted items such as hand-bags remain hard to come by and at higher prices than its peers.

Though Hermes, similar to other companies in the sector, has suffered slowing growth among in China because of a slowing economy and a government crackdown on gift-giving and corruption, Hermes's sales in Asia outside Japan actually grew 8.9% in the fourth quarter to €406 million.

The company said revenue was boosted by its new Shanghai flagship store that opened in September. But the increase slowed from earlier in the year, in an environment that the company said was "marked" by a slowdown in China's luxury market and events in Hong Kong.

The company's U.S business posted strong growth, with sales in the Americas up 21% and 16% when stripping out the effect of exchange rates in line with what other luxury brands have reported recently. Last week, French group LVMH said U.S consumers helped drive revenue gains last year, which offset its sluggish sales in China.

Source: Marketwatch

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