Leather goods and saddlery drive revenues for Hermès

Worldwide
Published:  23 March, 2017

Consolidated revenues for one of the world’s most luxurious fashion brands has passed the €5 billion mark to reach €5,202 million in 2016, up +7.5% at current exchange rates and +7.4% at constant exchange rates.

Hermès’ recurring operating income for 2016 was up 10%, amounting to €1,697 million (32.6% of sales). Net profit increased 13% to reach €1,100 million. According to the Group, the solid rise in revenue in its stores (+8%) was driven by growth in all geographical regions. “Hermès continued to improve the quality of its distribution network, with four store openings and several renovations and extension works”, said a company statement.

Japan (+9%) is reported to have 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 said it continued to develop even though the context remains challenging in Hong Kong and Macao. Sales in America were up +7%, while Europe performed well (+8%); “confirming the resistance of the Group despite the impact of recent events”. France displayed solid growth (+5%).

According to Hermès, growth in 2016 was driven by the success of its Leather Goods and Saddlery divisions “which confirm their role as the mainstay of the Group”. Growth in the category increased 14%, attributed to the success of the collections and the diversity of models, particularly the Constance, Halzan and Lindy bags alongside the Birkin and Kelly. Development is said to have been supported by the sustained pace of deliveries and production, gaining from the capacities of the three new French sites in Charente, Isère and Franche-Comté.

Over 2016, the Hermès Group’s workforce gained 590 members, including more than 400 in France, mainly in the production facilities and sales teams. At year-end 2016, the Group employed 12,834 people including 7,881 in France. In June 2017, the luxury brand is to inaugurate a new production unit near the France’s future leather cluster, the ‘Cité du Cuir’, which is expected to be officially open in 2020. Read more here.

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