Hermès Revenue Up to $3.03 Billion in Q3 Due to Global Growth

Hermès announced “very good revenue momentum” for the third quarter, generating 3.1 billion euros ($3.03 billion) for the three-month period ended September 30 (up 24 percent year-on-year — well above the analyst consensus of 15.3 percent). , “with strong growth across all businesses,” and 5.5 billion euros ($5.38 billion) in revenue (up 23 percent at constant rates) for the first nine months of the year. The French group highlighted “high levels of sales” across its groups, with its Ready-to-wear and Accessories, Watches and “Other” divisions posting “a notable increase in the third quarter”.

Looking at individual categories, Hermès’ mighty leather goods and saddlery division, whose sales rose 13 percent to 1.3 billion euros ($1.27 billion) in the third quarter (despite usual production restrictions), benefited from ” of the strong recovery in Greater China”. in the 3rd quarter and very sustained demand,” says the Hermès group. Leather goods and saddlery sales rose 12.5 percent to 3.7 billion euros ($3.62 billion) in the first 9 months. Sales of ready-to-wear and accessories rose 38 percent in the third quarter, due in part to the “big hit” of fashion accessories.

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Watch sales grew by 55 percent “thanks to the development of pieces with exceptional know-how, such as Arceau, Le temps voyageur clock and the success of the new H08 Watch.” And yet Hermès’ “Other” sectors rose 31 percent in the third quarter on “very dynamic growth in both housewares and jewelry.”

Hermès sales chart

Sales at the group’s stores rose 23 percent in the third quarter, according to Hermès, while a 26 percent increase in wholesale activity “reflected the resumption of travel retail.” At the same time, Hermès management said on a call Thursday that growth in s-commerce sales continued to outpace brick-and-mortar sales across all regions.

Geographically, according to Hermès, all areas have developed very well as of the end of September. Here, highlights include… Asia ex Japan (+21 percent) continued its “strong momentum” on the back of a 34 percent increase in revenue in the third quarter. Sales in Greater China “rebounded sharply” despite temporary closures, which the group said led to a “spectacular” rebound, particularly in Beijing and Shanghai, with sales reflecting organic growth rather than price increases.

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Japan (+21 percent) confirmed “the regularity and solidity of its growth thanks to the loyalty of local customers”. America (+28 percent) continued its upward trend in the third quarter. Europe excluding France (+25%) and France (+28%), helped by “the loyalty of local customers, benefited from the recovery in tourist flows, particularly in France, the UK and Italy”.

Hermès sales chart

According to Rahul Sharma, managing director of Neev Capital, Hermès has the “lowest impact of tourism” compared to its luxury companies. So, its regional results “directly showing strength by nationality.”

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Looking ahead, management says price increases are imminent, with the company planning to increase prices by 5 to 10 percent in January to offset increased material and labor costs, particularly in Europe. Hikes are expected to be smaller in the US, China and Singapore compared to the EU and Japan. These annual increases follow a 4 percent increase introduced earlier this year — up from the usual 2 percent annual increase in recent years).

Another forward-looking point focuses on Hermès’ supply chain, with management revealing that there could be issues in the fourth quarter as suppliers are “under pressure from inflation and sourcing of raw materials,” which may cause delays. Given that Hermès is “hiring full steam ahead” and “pays bonuses/wages to all employees,” Sharma assures that we “couldn’t get more positive signals about the health of the company.”


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