Currency Impacts to Slow Hermès’ Growth in 2015

In What's New, Industry News by Jeff Prine

hermesParis-Although one of the best performing public luxurygoods companies, Hermès International SCA today said it expects its 2015 sales to slow, hit by currency fluctuations that have plagued other luxury brands.

In its fourth quarter sales report issued Thursday, Hermès posted a 12% increase to 1.22 billion euros (about $1.38 billion), up from 1.1 billion euros in the same period in 2013. Excluding currency fluctuations such as the weakening yen, sales would have increased 9.6%, which again was a lower increase brought on by the political turmoil in Hong Kong.

Looking ahead, Hermès stated it would look “with the eye of the flaneur,” forecasting8% growth in revenue, down from an 11% increase this year, citing “economic, geopolitical and monetary uncertainties over the world.”

Although Hermès has yet to report its net income for 2014, the company said it expects its margins to narrow to 31% in the full year report.

CEO Axel Dumas noted that Hermès has exceeded 4 billion euros in sales for the first time last year, surpassing Gucci.

“There are also currency and geopolitical issues which encourage us to be prudent,” Dumas said. “We have a complex Chinese market, tensions in Europe.”

Another bright spot in the report was the strong performance of the Americas where sales were up 21% (up 16% excluding currency fluctuations).

Hermès also attributed increases to its new Shanghai Maison, a large flagship store station 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.

 

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