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Asia Powers Q1 Sales Gains at Hermès

Asia and Japan buoyed first-quarter revenue for Hermès, which documented an upturn in the U.S. as well.

In a Nutshell: The French luxury goods firm said on Thursday that organic revenue grew 33 percent for the quarter through the end of March, versus the first quarter of 2019. Sales in the group’s stores accelerated, up 41 percent versus the first quarter of 2019. The gain was 51 percent versus the first quarter of 2020, a period where parts of Asia and Europe were facing lockdowns last year due to Covid-19.

“The network continued to develop with the openings and extensions of stores, and thanks to growing online sales worldwide,” Hermès said. It also noted that wholesale revenue was down 2 percent, mostly due to the lack of sales in the travel retail channel.

“In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the Group confirms an ambitious goal for revenue growth at constant exchange rates,” Hermès said.

The strongest region for Hermès in the quarter was Asia, excluding Japan. The performance was driven by “dynamic activity” in Greater China, boosted by “sustained activity” in Korea, Thailand, Singapore and Australia. Japan saw sound growth based on the loyalty of local customers, and a new store was opened in Tokyo in February, the company said.

Elsewhere, Hermès said America returned to growth, up 23 percent, which started at the end of 2020. Europe was still impacted by new pandemic restrictions and by store closures in several countries, particularly in the U.K., Germany and Switzerland. The drop in tourist traffic was partially offset by local customers shopping online.

Hermès said that at the end of March, all business lines returned to growth. The brand’s ready-to-wear and accessories division reported growth at 51 percent, helped by the women’s Autumn-Winter 2021 fashion show, which was staged virtually from New York, Paris and Shanghai  in March, while the men’s collection was revealed in January. The leather goods and saddlery division saw an uptick in sales by 34 percent. The silk and textiles business also grew 34 percent, with “the diversity of creations, materials and formats that have met with great success with our customers, particularly in Asia,” the company said.

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The watch business rose 96 percent in the quarter, reflecting the fashion house’s “technical watch-making expertise” and creativity of the collections, the company said. It also noted a 93 percent gain in sales of homeware and jewelry, plus a 21 percent increase in perfumes and beauty. The perfume business was boosted by the launch in February of its new men’s fragrance H24, while the lipstick offering continued to evolve.

Net Sales: Total net sales for the first quarter rose 38.4 percent at current exchange rates to 2.08 billion euros ($2.50 billion) from 1.51 billion euros ($1.81 billion) in the year ago period.

By region, total sales in Europe were down 5.6 percent to 381.0 million euros ($457.5 million). In France, domestic sales fell 9.3 percent to 153.1 million euros ($183.8 million). The country began lockdowns in certain regions during parts of the quarter due to a rise in Covid infections.

In the Americas, sales rose 12.6 percent to 290.9 million euros ($349.3 million), while revenue from “Other” businesses saw an increase of 39.7 percent to 40.6 million euros ($48.8 million).

Helping the quarter’s uptick in consolidated sales was the 68.4 percent growth in sales from Asia, which rose to 1.37 billion euros ($1.65 billion). Sales growth in Asia Pacific, excluding Japan, grew 88.1 percent to 1.13 billion euros ($1.36 billion). Sales in Japan rose 12.9 percent to 241.1 million euros ($289.5 million).

Chairman’s Take: “In a still unstable context, our strong sales growth confirms the robustness of our sustainable artisanal model and the desirability of our collections to our customers all over the world,” Axel Dumas, executive chairman, said.