Hermès bounces back as H1 beats both 2020 and 2019
Hermès became the latest luxury group to announce a rebound on Friday as the upscale leather goods and fashion maker saw its sales soaring during Q2 and the first half as a whole.
It was boosted by the easing or ending of lockdowns in key markets such as the US and Asia.
2020 was a tough year for luxury as lockdowns closed the stores that are still the lifeblood of the sector, even though it’s increasingly embracing digital. Those lockdowns also meant the cancellation of the big social events that are so important for reminding consumers to buy something expensive.
Social activity may not be fully back on the agenda just yet, but as well as Hermès’ sales rebounding against the weakness in 2020, they also leapt ahead of the more normal 2019 Q2 and H1. In constant currencies, Q2 sales rose 127% year-on-year to €2.15 billion ($2.55 billion) and on a two-year comparison, they rose 33%.
For the first half, consolidated revenue rose 77% year-on-year at constant exchange rates to €4.235 billion. They were up 33% over two years. Recurring operating income at 41% of sales was €1.722 million (a percentage that matched that of rival LVMH). And net income reached €1.174 billion from €335 million a year earlier and €754 million in H1 2019.
Clearly Q2 continued Q1’s positive trends, but it also saw some acceleration in certain regions, with Europe starting its recovery.
The company said H1 sales in the group's stores increased by 81% at constant exchange rates compared to last year, and by 41% compared to 2019. Wholesale activities “bounced back” (+46%) but “remained penalised particularly by travel retail”.
Sales in Asia excluding Japan rose 87% in H1 year-on-year and 70% compared to 2019. They were driven by the strong performance in Greater China and the acceleration in sales in Singapore and Thailand, “despite new restrictions in some countries in the second quarter”.
In the Americas sales were up 115%, with a Q2 acceleration being noted, and they rose 25% over two years.
Japan was up 59% year-on-year and 22% over two years and “achieved an outstanding performance thanks to the loyalty of local customers, despite new measures introduced as a result of the health state of emergency”.
And that European recovery? Well, European sales excluding France rose 52% and were down only 3% over two years. But while France was up 35% year-on-year, it was still down as much as 16% over two years.
Looking at the firm’s individual product segments, it said Leather Goods and Saddlery sales rose 63% on the year and 25% over two years with demand “both for the reinvented classics and new models”.
At the Ready-to-Wear and Accessories division, sales rose 98% over one year and 40% over two, and in Silk and Textiles, they rose 72% and 6%. Perfume and Beauty was up 65% on the year and 17% over two years and Watches were up 121% and 80%. Its ‘Other’ division rose 100% and 92%, thanks to Homeware and Jewellery.
Axel Dumas, the group’s executive chairman, called the performance exceptional and highlighted that the company hadn’t reined-in investment to save cash during the pandemic period. The company continued to upgrade stores and open new ones, as well as adding new staff, rather than shedding them as many companies did.
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