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Hermès reports 6 percent rise in Q2 sales

By Prachi Singh

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Business

The Hermès Group has said that the growth was sustained in the second quarter with 8 percent at constant exchange rates and 6 percent at current exchanges rates. Group's consolidated revenues amounted to 2,440 million euros (2,692 million dollars) in the first half of 2016, up 7 percent at constant exchange rates. After adjustment for the negative currency effect, growth was 6 percent. The group's stores posted an increase in sales of 8 percent at constant exchange rates, in all the regions.

Sales by region and segments witnessed growth

Over the first half of 2016, revenues rose in all the regions worldwide. Japan’s 10 percent rise in revenues was driven by its selective distribution network, despite the strengthening of the Yen. Asia excluding Japan reported a 5 percent increase, which re-opened the Liat Towers store in Singapore in May after extension and renovation, pursued its growth.

In continental China, sales continued to rise even though the context remains challenging in Hong Kong and Macao. America with 8 percent growth benefitted from last year's extensions and renovations, is the company said, is developing in a still uncertain context. Europe posted 8 percent growth, performing well in the Group's stores which confirm their resistance, despite the impact events in France.

Growth was driven by the success of Leather Goods and Saddlery which confirmed its role as the mainstay of the Group. Growth in Leather Goods and Saddlery of 16 percent was driven by the success of the collections and the models’ diversity, in particular the bags Constance, Halzan and Lindy, together with Birkin and Kelly. The development was supported by the sustained pace of production and the increase in capacities at the three sites in Charente, Isère and Franche-Comté.

The Ready-to-wear and Accessories division, however reported a 2 percent decline, in contrast with the success of the latest women's ready-to-wear and shoe collections. The Silk and Textiles business line declined 7 percent was penalized by events in Europe, and by slowing sales in Greater China and America. The Perfumes division posted a 4 percent increase, driven by the success of Terre d’Hermès and by the latest creations with the launch of colognes, Eau de néroli doré and Eau de rhubarbe écarlate. Watches remained stable, penalized by a still challenging market, particularly in Asia excluding Japan.

Outlook reflects growth below medium-term goal

As announced when the 2015 revenues and results were published, the company said sales growth in 2016 could be below the medium-term goal of 8 percent revenue growth at constant exchange rates owing to the economic, geopolitical and monetary uncertainties around the world. In 2016, Hermès is celebrating "nature at a gallop".

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