Hermès said it had no plans to harmonise prices across regions this year, rejecting a strategy taken by several leading luxury brands in recent months.
Axel Dumas, chief executive of the Paris-based luxury goods producer, said raising prices in Europe would risk affecting domestic sales.
We have a very strong French and European customer base, he told analysts on Wednesday. If we significantly increased our prices at this juncture, that would mean giving up on local customers and that is something we do not want to do.
His comments came as the family-controlled group reported a 7 per cent rise in 2014 operating profit to 1.3bn, in line with analysts expectations though operating margins fell slightly to 31.5 per cent from 32.4 per cent in 2013.
Hermès said it would pay an exceptional dividend of 5 per share as well as an ordinary dividend of 2.95 per share. The group said it expected sales this year to grow 8 per cent in constant-currency terms.
Mr Dumas, who became sole chief executive last year, said Hermès would stay the course on prices even as some other luxury goods producers had opted to rebalance the widening price differential between China and Europe.
The euros weakness against the renminbi has stretched traditional price differentials between Europe and China, encouraging Chinese middlemen to buy goods abroad and sell them more cheaply back home a practice that many brands claim damages their image and encourages fakes.
This month, Chanel became the latest big-name luxury brand to announce it was slashing prices in Asia while raising them in Europe to combat a grey market that had exploded, thanks in large part to the recent fall in the euro.
Hermès wants to stay authentic and wants French consumers to continue to buy the brand, Luca Solca, luxury analyst at Exane BNP Paribas, said on Wednesday. Hence the choice not to jack up European prices massively [like] Chanel, which is becoming de facto a Chinese brand.
Hermès, which makes high-end leather goods such as the Birkin and Kelly bags, has withstood a slowdown in the luxury market better than its competitors, many of which have suffered from a crackdown by the Chinese government on gift-giving by officials.
It said sales last year in Asia excluding Japan grew 13 per cent, adding it expected to see long-term momentum in that market. It also said online sales were growing at double-digit pace.
Mr Dumas said the group would be making large-scale investments this year in IT and that it would also develop a new website. Like it or not, this is what customers want, he said. This is where things are headed.
© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Axel Dumas, chief executive of the Paris-based luxury goods producer, said raising prices in Europe would risk affecting domestic sales.
We have a very strong French and European customer base, he told analysts on Wednesday. If we significantly increased our prices at this juncture, that would mean giving up on local customers and that is something we do not want to do.
His comments came as the family-controlled group reported a 7 per cent rise in 2014 operating profit to 1.3bn, in line with analysts expectations though operating margins fell slightly to 31.5 per cent from 32.4 per cent in 2013.
Hermès said it would pay an exceptional dividend of 5 per share as well as an ordinary dividend of 2.95 per share. The group said it expected sales this year to grow 8 per cent in constant-currency terms.
Mr Dumas, who became sole chief executive last year, said Hermès would stay the course on prices even as some other luxury goods producers had opted to rebalance the widening price differential between China and Europe.
The euros weakness against the renminbi has stretched traditional price differentials between Europe and China, encouraging Chinese middlemen to buy goods abroad and sell them more cheaply back home a practice that many brands claim damages their image and encourages fakes.
This month, Chanel became the latest big-name luxury brand to announce it was slashing prices in Asia while raising them in Europe to combat a grey market that had exploded, thanks in large part to the recent fall in the euro.
Hermès wants to stay authentic and wants French consumers to continue to buy the brand, Luca Solca, luxury analyst at Exane BNP Paribas, said on Wednesday. Hence the choice not to jack up European prices massively [like] Chanel, which is becoming de facto a Chinese brand.
Hermès, which makes high-end leather goods such as the Birkin and Kelly bags, has withstood a slowdown in the luxury market better than its competitors, many of which have suffered from a crackdown by the Chinese government on gift-giving by officials.
It said sales last year in Asia excluding Japan grew 13 per cent, adding it expected to see long-term momentum in that market. It also said online sales were growing at double-digit pace.
Mr Dumas said the group would be making large-scale investments this year in IT and that it would also develop a new website. Like it or not, this is what customers want, he said. This is where things are headed.
© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
