Hermes Sales Decline Despite Ambitious Goals

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@pursebop, Maple and Ash, Chicago.

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.

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Picture courtesy @xdinogx

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Pic courtesy @tellementluiblog

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2 Responses to “Hermes Sales Decline Despite Ambitious Goals”

  • Hermes loses much sales revenues to others by making the availability of its bags, particularly Birkin and Kelly bags, too limited. For example, when I went to a vacation in Europe, I budgeted my money to buy Hermes bags. However, due to unavailabilities of the bags at several Hermes stores I stopped by in different European cities, I instead spent my money at other stores, such as VCA, Cartier, and Chanel.