Tags: Hermes | Asia | retail | earnings

Hermes First-Half Profit Rises as Asian Revenue Advances

Friday, 29 Aug 2014 09:36 AM

Hermes International SCA, the French maker of $10,000 Birkin bags, repeated its forecasts after reporting a 6.3 percent rise in first-half earnings, underscoring the resilience of its exclusive positioning.

Operating profit reached 621 million euros ($818 million) from 584 million euros, Paris-based Hermes said Friday. Analysts predicted 617 million euros, according to the median of nine estimates compiled by Bloomberg. Earnings as a proportion of sales narrowed to 32.6 percent from 33.1 percent, weighed down by unfavorable exchange rates.

Supply constraints and high prices have helped cushion Hermes from softening luxury demand in Asia that led Gucci-owner Kering SA and LVMH Moet Hennessy Louis Vuitton SA to report lower first-half profits. Still, the weakness of currencies such as the yen against the euro mean that the company expects this year’s operating margin to decline from a record 32.4 percent last year, Hermes reiterated.

“Hermes is the most defensive name in the luxury space: a long waiting list and a deliberate effort to starve demand and maintain a rarity effect make it so that Hermes growth and margin performance is more stable than peers,” Luca Solca, an analyst at Exane BNP Paribas in London said by e-mail.

Hermes retained its mid-term objective of revenue growth of about 10 percent at constant exchange rates. Solca said he estimates sales growth of 12 percent in 2014 on that basis.

First-half revenue rose 7.9 percent to 1.91 billion euros, and was up 12 percent at constant exchange rates, Hermes said in July. The saddle-maker, which is adding workshops in France and stores worldwide, said at the time that the first-half operating margin would be close to 32.4 percent. LVMH owns 23.1 percent of Hermes.

The stock has gained 5.3 percent in the past 12 months, compared with a 2.1 percent decline in LVMH.

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Hermes International SCA, the French maker of $10,000 Birkin bags, repeated its forecasts after reporting a 6.3 percent rise in first-half earnings, underscoring the resilience of its exclusive positioning.
Hermes, Asia, retail, earnings
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2014-36-29
Friday, 29 Aug 2014 09:36 AM
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