Hermès increases profits and sales but not prices

French luxury group Hermès has seen a significant hike in both profits and sales although it has advanced that it won’t increase prices. Both full year’s revenue and profits improved by over 20 percent. Revenue added 22.6 percent on

the previous year to reach 3,484 million euros and operating income closed at 1,119 million euros (+ 26.4 percent).

The Executive Management presented the audited accounts for 2012 to the Supervisory Board at its meeting on 20 March 2013, reporting net profit up by 25 percent to 740 million euros, ahead of the 709 million euros forecast of analysts surveyed by Reuters.

Operating income rose by 26.4 percent in 2012 and by 32.1 percent of sales, hitting a new record as it overcame the all-time high registered in 2011 (its highest level since the company listed in 1993.) Operating profit rose to 1.12 billion euros from 885 million euros in 2011.

Despite being Asia the biggest price of the prize, Hermès strong growth “it’s not just an Asian story,” said Catherine Rolland, a luxury analyst at Kepler Capital Markets quoted by ‘The New York Times’. “They had strong growth in all regions.”

In fact, Hermès saw sales in Asian markets growing at two-digit speed. Sales in Asia excluding Japan rose 25 percent from a year earlier, while Japanese sales grew 7 percent. European sales, which include products sold to Asian visitors to the Continent, rose 15 percent, and sales in the Americas grew 14 percent.

In the same line, Rolland expects now the French luxury group to post “double-digit sales growth” this year, growing faster than its rivals in the luxury sector. The main concern for the industry, she said, was the outlook for China, and in particular a clampdown on gift-giving in the country.

With regards to its plans for the coming months, Hermès said in February that it plans to continue investing in sourcing this year, after acquiring French calf hide specialist La Tannerie d'Annonay and watch-dial maker Nateber in 2012, recalled ‘DowJones’.

The company proposed a dividend of 2.5 euros a share, compared with 2 euros and a bonus payout of 5 euros a share in 2011.

Prices will remain stable
The luxury giant will resist raising prices significantly in 2013 even as profitability may decline as the Japanese yen weakens against the euro, reported ‘New York Post’.

“There won’t be a big movement” in the prices customers pay for the French label coveted handbags and scarves, CEO Patrick Thomas said yesterday as Hermès reported record profitability for 2012. However, some minor adjustments might be expected.

The company said that it was optimistic about the outlook for 2013 but did not make any forecasts. Sales at the company have doubled since 2008.