Feb 17, 2017 | By WGSN Insider
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Apr 29, 2015
The challenges facing the luxury sector at the moment made the results announcement from French group Hermès even more closely watched than usual on Wednesday. So what did we see through our financial magnifying glass? Some good news for a start.
The €35bn company doesn’t seem to be facing quite such tough challenges as many of its sector peers and sales rose a powerful 19% year-on-year the first three months to €1.1bn ($1.2bn). Of course, the weak euro was a big help but even with currency effects stripped out, the rise was still a more-than-respectable 8% and only 2% less than the Christmas quarter’s 10% comps rise. Sales at its own stores rose 10% currency-neutral in Q1.
So just why is Hermès doing so well when some of its bigger, higher-profile rivals with a wider spread of brands are struggling?
Its not-too-flashy/ultra-luxe products are obviously appealing to the key Asian consumer as it saw 9.6% currency-neutral sales rise there. This figure was boosted by its new Shanghai flagship that opened last autumn and double-digit increases in a recovering Japanese market. In fact, Japanese sales soared 15.2%, even though comparisons with a year ago were tough, leaving the rest of Asia-Pacific with a healthy 7.7% rise.
The Americas also seems to love what Hermès has to offer as comp sales rose 9.6% there too. However, its local European market saw only a 4.6% rise – although in the current climate, that’s still pretty good. But France boosted the figure and Europe excluding France only rose 3.1%.
Demand for Leather Goods and Saddlery products, up 12%, remained high, it said, while the Ready-to-Wear and Accessories division also came in with a strong 10% rise, benefitting from the success of fashion accessories, particularly the latest footwear collections.
The Silk and Textiles business line, whose range is expanding with some “exceptional products”, posted a 6% rise.
Perfumes division recorded a slight increase of just 1% while watches, which were down 3%.
Driven by jewellery, Other Hermès business lines rose 8% despite a particularly high comparison basis, it noted.
The fact is that while the Birkin and Kelly bags Hermès makes may be firmly attached to the ‘It’ bag hall of fame, the brand’s overall image is more about the kind of quiet, understated luxury that increasingly appeals to both a mature market luxury customer and the increasingly sophisticated emerging markets where bling used to be king.
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