Hermès increased production capacity boosts leather goods sales

Worldwide
Published:  21 March, 2019

Consolidated revenue for the France headquartered luxury Group amounted to €5,966 million in 2018, up +10.4% at constant exchange rates and +7.5% at current exchange rates.

Hermès’ recurring operating income increased +6% in 2018, to €2,045 million (34.3% of sales), and net profit was up +15% to €1,405 million. The Leather Goods and Saddlery category recorded a +9% growth in the year, “thanks to the increase in production capacity in order to meet the high demand, both for the re-invented classics and other models such as the Mosaïque and 24/24 bags”, says Hermès. Development projects continued in France with the Manufacture de l’Allan workshop “gaining momentum” and the launch of the Guyenne and Montereau workshops, which are expected to be completed by 2020. As reported by ILM, a new production site will be built in Louviers, north-western France, by 2021.

If all business lines recorded growth in 2018, the Ready-to-Wear and Accessories division recorded a “remarkable performance”, with a +14% increase in sales, while the Watches business line grew +10% in the year. Geographically, sales in Asia excluding Japan were up +14%, Japan +8%, and America +12%. Europe excluding France (+8%) achieved “a sound performance”, driven in particular by the UK and Italy. France (+6%) posted growth, despite the negative impact of the yellow-vests protests at the end of the year.

Hermès says it has increased its workforce by almost 800 people, including more than 500 in France, mainly in the production units and sales teams. At the end of 2018, the Group employed 14,284 people, including 8,846 in France. The new site in Louviers is expected to create another 250 jobs.

In its outlook, the Group confirms “an ambitious goal for revenue growth at constant exchange rates” and announced that “In the pursuit of dreams” will be its theme for 2019.