Hermes Profits Rise in Year

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  1. PARIS — Aided by disposals and accelerating sales in the second half of 2007, full-year net profits at Hermès International rose 7.3 percent to 288 million euros, or $394.8 million, from 268.4 million euros, or $337.2 million, a year ago.

    “We had very good results from our growth engines: silk, men’s ready-to-wear, fashion accessories and jewelry. This did boost the figures,” said Patrick Thomas, CEO at Hermès. “We are very pleased.”
    The results were “slightly better” than Hermès’ projections and bested analysts’ expectations.
    Still, unfavorable exchange rates chopped 80 million euros, or $109.7 million, off full-year sales tallies, and wiped 44 million euros, or $60.3 million, from operating results. (Dollar figures are converted from euros at average exchange rates for the respective periods.)

    Operating profits in 2007 improved 2.1 percent to 423.7 million euros, or $580.8 million, from 415.2 million euros, or $521.6 million, as sales increased 7.3 percent to 1.63 billion euros, or $2.38 billion. At constant exchange rates, the bump in operating profits stood at 14.5 percent.

    The figures include an exceptional gain of 9.2 million euros, or $12.6 million, from the disposal of bonds in Leica Camera AG. The net margin remained steady at 17.7 percent of sales.

    Given mounting economic woes in the U.S., Thomas said forecasting is becoming increasingly difficult. Hermès has set a sales growth target of around 10 percent at constant exchange for 2008.

    Asked about recent trading, Thomas said, “The beginning of the year was good everywhere, including the U.S.”

    However, he cautioned it is “difficult to extrapolate” for the balance of the year given multiple uncertainties in the U.S. and
    a “challenging market in Japan,” which accounted for 24 percent of Hermès sales last year. The Americas represented 15 percent of sales, France 20 percent, the rest of Europe 21 percent, Asia-Pacific 17 percent and other regions 3 percent.

    Thomas said Hermès would continue expanding its production capacity and store network this year, opening 12 new branches. The locations are in San Diego and Santa Fe, N.M., in the United States, four stores in China, two in Macau and one each in Hong Kong, Seoul, Kobe in Japan and Delhi in India. Roughly 30 stores are slated for renovation.

    Last year, Hermès said investments in its factories and boutiques totaled 156 million euros, or $213.9 million.

    The fact that France alone still accounts for a fifth of their sales suprises me, especially compared to the lowly 15% of both N. & S. America.

    Btw is the Santa Fe thing right? The SW opening is Scottsdale, no?
  2. Thanks for this post!!! I am actually not surprised that H sells 20% in that is where most of us go to get our H!! Mothership rules!! Again, I really like the post, especially with all the new boutiques!!
  3. I think that Hermes is such a heritage brand in France that by some ladies it's seen as just a regular store to go and buy small leather goods and scarves hence the large market share in France, I think it's a great testament to their being brand loyal to French brands
  4. No wonder a lot of people say it's easy to get a Birkin in Japan plus the inventory of the resellers are just :drool:. I never knew Japan was their biggest market. For some reason, I thought it would be North America.

    Thanks for posting!
  5. I'm not surprised that france accounts for that much. It's the most visited tourist destination in the world, Paris alone has more than 20 million visitors... I don't think the sales in France reflects the actual french interest in the brand for this reason.

    I don't think north america is the largest market for most luxury fashion brands, including LV, gucci etc.
  6. I wonder how much of their new profits are due to tPF!!? LOL!
  7. ^ *ROTFLMAO*

    ValleyO, thanks for sharing the article. :smile:
  8. frenchiefan:

    Exactly what I was thinking!!!! They should really sponsor this websight eh?

  9. Interesting Valley, Thankyou
  10. Maybe we should all buy some H stock with 10% earnings - Hermes profit could then aid our H addiction.
  11. One smart person here...I like the way you're thinking Sus...PP
  12. What a wonderful feeling knowing that I contributed to H's profits last year!! (now if only I got something from them in return!)

  13. Fascinating read ValleyO, thank you for posting.
    The french figures don't surprise me at all, there are more H stores here than in the whole of the US, or any other european country. I live in the countryside and my nearest store is just 30 minutes away. Within 1.5 hours there are three more and another five within 2.5hrs drive. All of them are well stocked!
  14. Great article ValleyO. Thanks for sharing it.

    I would be really curious on the breakdown of H goods. While their handbags are clearly the big ticket items, I am wondering if they actually make greater profits from their accessories such as scarves and leather accessories. I bet this is especially the case in France where women build a base wardrobe and add bits and pieces to it with each new season. Noticed when I was at FSH that the French women were at the scarf counter while the Asian and Americans seemed to be in the handbag section.
  15. man with the growth in profits why did they need to increase their prices 10-15% this year! GEEZ.