Sales in China Buoy Hermès Half-Year Financials

@bagssionate

Apparently, there’s no slowing in the appetite for Hermès Birkins, Kellys, and other leather goods. And certainly not in China. Hermès Paris financials for the first half of 2019 display continued double-digit growth in almost all regions. Revenue was up 15% (at current exchange rates), recurring income rose 15%, as did net profit.

Even the effects of the Hong Kong protests this summer (particularly in August) were muted by the sales in mainland China and other areas in Asia (other than Japan). As you may recall, Hermès closed a number of Hong Kong locations (including the airport) over the last two months due to the anti-government protests.

Hermès’ biggest Hong Kong store. Photo courtesy of SCMP

The Percentages

Broken down geographically, revenue risings were as follows:

Hermès RegionRevenue Increase (%)
Asia (excluding Japan)+18%
Japan+10%
America+10%
Europe (excluding France)+9%
France+4%

The Details

In terms of business lines, all saw increases in revenues. Specifically, Leather Goods and Saddlery, the largest of Hermès’ business lines by more than two-fold, saw its revenues rise 12%. The next largest division, Ready-to-Wear and Fashion Accessories increased 15% while Other Business, which includes jewelry and home, rose 19%.

But, let’s focus on the top line – Leather goods. Hermès continues to follow a more goods means more revenues strategy. In its report, the Company reiterates its addition of new leather production facilities – one to come on line in 2020 (Maroquinerie) and another in 2021 (Louviers). It opened a training facility in Fitilieu, and announced an extension of the Ganterie-Maroquinerie de Saint-Junien workshop (Limousin region). Perhaps not surprisingly, Hermès reports that it has increased its workforce by 500.

@mywardrobediaries

So, we’ll ask again: does Hermès’ increase in production affect your desire for its leather goods? Do you find Birkins and Kellys more available and less desirable? Or are you thrilled to get your hands on all the bags you desire?

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