Back in July, we covered the release of Hermes’s first half financials (Read: Hermes Weathers the Luxury Storm for Now). While the rest of the luxury industry flailed after Brexit, Hermes seemed to be in a much stronger financial position. (Read: Brexit…and Bags) Second quarter revenue was up over 6% and sales overall in the first half trounced analyst expectations (8.1% actual vs 5.6% predicted). Shares were up 24% on the year through the beginning of this week.
But what a difference a few months can make…
On Wednesday in his latest conference call, CEO Axel Dumas publicly scrapped Hermes’s ambitious 8% target for annual sales growth. While this reassessment was hinted at in July, his definitive statement brought on the biggest decline in Hermes shares in three months (down 7.7%).
Here’s his assessment, as reported by Bloomberg:
“We have to be frank and transparent, we see first-half results that were better than expected, but there is a lot of uncertainty around the world and the rigidity of written guidance means we are less flexible.”
Brushing aside the financial-speak, Dumas is acknowledging that the company can’t in good faith offer a valid case for 8% growth. He didn’t present an alternative target, which might mean the situation is even worse than it appears…we’ll keep watching this space, stay tuned.