French luxury brand Hermès has reported strong fourth-quarter and annual results, exceeding analysts’ expectations. The company experienced a 22.9% rise in sales in Q4, generating €2.99 billion in revenue. This success can be attributed to increased sales in the US and sustained demand in China, despite the challenges posed by the ongoing Covid-19 pandemic. Hermès remains optimistic about future growth and has set ambitious revenue targets, demonstrating confidence in its ability to navigate global economic uncertainties.
For the full-year 2022, Hermès saw a consolidated revenue increase of 29% to €11.602 billion (23% at constant exchange rates). Recurring operating income accounted for 40.5% of sales, reaching €4.697 billion, compared to €3.53 billion and 39.3% of sales the previous year. Net profit rose to €3.367 billion, representing a net profitability of 29%, an increase from €2.445 billion and 27.2% net profitability in the previous year.
Executive chairman Axel Dumas acknowledges that Hermès’ success in international markets can be attributed to the company’s artisanal and integrated approach. He emphasizes the brand’s commitment to responsible and sustainable practices, highlighting the significance of offering functional objects with uncompromising quality and assertive style.
Sales performance for Hermès showed significant growth in both group stores (+23%) and wholesale (+26%) channels. This growth was driven by the recovery of travel retail. The company expanded its exclusive distribution network and experienced a positive trend in online sales worldwide. Asia (excluding Japan) saw a 22% increase in sales, with Greater China remaining strong. Hermès expanded its presence in China by opening new stores and renovating existing ones. Japan recorded a steady 20% sales increase, benefiting from the reopening of the Takashimaya store in Nagoya.
The Americas region had a particularly successful year, with sales up 32%, supported by store openings in Austin and New York, as well as the reopening of its Guadalajara location in Mexico. Europe (excluding France) experienced an 18% increase in sales due to the return of tourism and the loyalty of local customers. France itself saw a 27% sales increase, driven by high demand from both domestic and international clients.
Hermès’ sales by business line displayed positive growth across categories. Ready-to-Wear and Accessories, Watches, and the ‘Other’ category all saw remarkable increases in sales. The Leather Goods and Saddlery business line had slightly lower growth of 16%, but still performed well, aided by favorable comparisons in the fourth quarter. The Ready-to-Wear and Accessories division experienced the highest growth rate of 36%, thanks to the popularity of its collections on the runway and in stores. Watches saw a significant growth rate of 46%, while the ‘Other’ category, which includes Jewellery and Homeware, rose by 30%.
The Silk and Textiles business line impressed with a 20% growth rate, supported by increased production capacities. Perfume and Beauty also saw a 15% increase in sales due to the success of product launches. Additionally, Hermès Beauty, established two years ago, continues to experience strong growth.
Hermès’ strong performance in 2022 demonstrates its resilience and adaptability in challenging circumstances. The brand’s commitment to craftsmanship, sustainability, and delivering high-quality products with a distinct style remains steadfast. With ambitious revenue targets and continued growth in key markets, Hermès is primed for further success in the luxury fashion industry.
Useful links:
1. Reuters – Hermès Q4 Sales Beat Forecast
2. Vogue Business – Hermès’ Commitment to Sustainability
