Hermes International says growth in greater China remains rapid despite months of protests in the luxury shopping hub of Hong Kong.
A “slight acceleration” in mainland China will offset the impact from store closures in Hong Kong, which was most significant in August, Hermes Chief Financial Officer Eric du Halgouet said on a conference call.
“Globally, our performance in greater China has been identical,” he said. “We remain on the same trend.” Hermes shares fell less than 1% in Paris trading to 634.80 euros.
Du Halgouet spoke to reporters as Hermes reported first-half operating profit of 1.14 billion euros ($1.26 billion). Analysts had predicted 1.12 billion euros.
Net profit reached €754 million (23% of sales). Axel Dumas, Executive Chairman of Hermès, said:“Hermès registered strong earnings growth over the first half of 2019, reflecting our customers’ loyalty in all markets and the creative excellence that drives all business lines.”
In the first half of 2019, revenue increased in all geographical areas worldwide. Asia excluding Japan (+18%) continued its outstanding performance, with positive momentum in continental China and double-digit growth in all other countries in the area. The Group benefitted from successful store openings and extensions in recent months, particularly Shanghai IFC in China and Marina Bay Sands in Singapore. A new store opened in March in Phuket Floresta in Thailand. Rollout of the new digital platform in Asia will continue at the end of the year in Singapore.
Japan (+10%) confirmed its sound growth. The new platform hermes.jp was successfully deployed in June, offering editorial content and products which reflect the diversity of the Maison’s creations.
America (+10%) posted a strong performance at the end of June, despite a high comparison basis. Last April, the Group opened its 36th store in the USA at the heart of New York’s Meatpacking district, and reopened the Waikiki store in Hawaii in June.
Europe excluding France (+9%) and France (+4%) achieved a good performance. The store in Amsterdam has been moved and expanded in May, and the store on Stoleshnikov Lane in the historical centre of Moscow was renovated in June. In France, sales improved during the past months.
The momentum in the first half was driven by solid growth across all business lines, with a remarkable performance of the Ready-to-Wear and Accessories division. Growth in Leather Goods and Saddlery (+12%) was particularly sustained over the first half of the year, based on collections blending style, know-how and diversity of materials. The division’s annual growth target remains unchanged. Demand remains very high, both for the Maison’s classics and other models, such as the Mosaïque and 24/24 bags.
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