Hermès leans on strong first quarter

Growth mostly in first quarter

Its sales growth was mostly achieved in its first quarter with + 14.7 % (in local currency), which may have been a misrepresentation as an impending Japanese VAT increase forced local consumers to order prematurely. That helped push local sales up 21.7 % in the first quarter.

Nevertheless, the company grew in many areas, as all regions helped increase sales. In Asia, excluding Japan, sales grew 17 % while Japan managed an 11 % increase in the first half of 2014. The strong sales increase in the first quarter was followed by a 6.3 % sales drop. The Americas helped with a 13 % increase and Europe grew 7 % despite a persisting crisis in several countries.

Watches only one not up

Looking at each product category, prêt-à-porter and accessories performed well with a 16 % increase. Leatherwear went up 13 %, perfumes 8 % despite a weak performance in the first quarter. A new women’s fragrance product range, called Jour d’Hermès, helped bring things back around.

Watches failed to follow the company’s general growth as it dropped nearly 7 %, mainly because of difficult Chinese sales. The future looks even bleaker: the first quarter showed level sales, while in the second quarter sales dropped 15 %. Following anti-corruption campaigns, Chinese people wearing expensive watches are now frowned upon.

Hermès has not yet released financial results, which will be divulged 29 August. The company did say that the operational margins will be slightly lower than in 2013’s first half (33.1 %). They should be in line with 2013’s full-year margins (32.4 %).