PARIS - Hermes showed it was immune to shopping disruptions in China, with sales jumping in the fourth quarter as wealthy consumers’ appetite for Birkin bags and other high-end leather goods remained strong.
Sales gained 23 per cent in the three months through the end of December at constant exchange rates, compared with the same period a year earlier, the French company said on Friday in a statement. Analysts had expected a 17 per cent gain.
The biggest division, leather goods and saddlery, which sells the Birkin bag, grew by a quarter during the period, also surpassing estimates. The growth helped push Hermes’ sales to a record €11.6 billion (S$16.5 billion) for 2022, up from €8.98 billion the previous year. Recurring operating income for the year also surpassed forecasts.
Hermes’ results came despite a blow to spending in China, where a wave of Covid-19 kept shoppers and workers at home. Some luxury groups, such as Gucci owner Kering, were severely hit, whereas Hermes sales in the Asia-Pacific region excluding Japan jumped by about 25 per cent.
“Hermes has ploughed through the Covid-19 related issues” in the quarter, Bernstein analyst Luca Solca wrote in a note. “With recent very strong share price performance, much of the good news seems to be reflected in the Hermes share price.”
Shares in Hermes have gained about 20 per cent so far in 2023, and fell about 1 per cent in early trading on Friday.
Executive chairman Axel Dumas said he is confident for 2023 after his group had a “very strong” 2022 despite various uncertainties. “Historically, the group has been resilient through crises,” he said during a call with reporters.
The company will pay an exceptional €4,000 bonus (S$5,700) to all employees worldwide at the end of this month, Mr Dumas added.
Hermes, among the most exclusive luxury brands, is trying to meet soaring demand for its Birkin and Kelly bags by opening new manufacturing plants in France. Even with the expansion, customers often face long waiting lists for the products; many turn to the resale market, purchasing the bags at an even higher price.
In January, Hermes implemented 8 per cent product price hikes in France, and an average of 7 per cent globally, Mr Dumas said.
During the last quarter, Hermes opened a 1,881 square metre store on Madison Avenue in New York City. The brand is holding its womens’ fall-winter ready-to-wear show on March 4 in Paris during fashion week. BLOOMBERG
