Leather helps Hermès to outperform sector rivals

France
Published:  08 February, 2017

In 2016, the France based luxury brand and leather goods specialist, Hermès had consolidated revenue that has passed the €5 billion threshold, amounting to €5202 million, up 7.5% at current exchange rates, and 7.4% at constant exchange rates. Sales growth was sustained in the fourth quarter (+8% at current exchange rates, and +7% at constant exchange rates). 

Growth at constant exchange rates over the year was driven by the success of leather goods and saddlery products (47% of group turnover) which confirm their role as the mainstay of the Group. Otherwise, sales benefitted from a positive momentum at year end in certain sectors such as Silk and the Ready-to-wear and Accessories division. 

Hermès says that growth in leather goods and saddlery (+14%) “was remarkable”, thanks to the success of the collections and the diversity of models, particularly the Constance, Halzan and Lindy bags alongside the Birkin and Kelly. Development was supported by the sustained pace of deliveries and production, gaining from the capacities of the three new production sites in Charente, Isère and Franche-Comté. Investments for a third site in this latter region continued.

The solid rise in revenue recorded in 2016 in Group stores (+8%) was driven by growth in all geographical areas. Hermès continued to improve the quality of its distribution network, with four store openings and several renovations and extension works. 

Japan (+9%) performed well thanks to its selective distribution network, despite the strengthening of the Yen and a high comparison basis. Asia excluding Japan (+7%) pursued its growth, particularly with extensions of the Liat Towers and Takashimaya stores in Singapore and store openings in Macao, at Hong Kong airport and in Chongqing in China. In mainland China, the Group continued to develop even though the market remains challenging in Hong Kong and Macao. 

In North America (+7%) achieved solid growth, in a contrasting environment.

Europe (+8%) posted growth, performing well which confirms the resistance of the group, despite the impact of recent events. The home market France (+5%) displayed solid growth. 

Outlook 

For the full year 2016, as announced in July and when the interim results were published, operating profitability should be slightly higher than in 2015. 

In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the Group confirms an ambitious goal for revenue growth at constant exchange rates. 

Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, maintaining control over know-how and communication. 

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