Hermes thanks Asia for stellar first half of 2018 - despite trade war!
Iconic French luxury group Hermes has reported a strong first half of 2018, particularly notable for a rise in earnings, which it says came from continued strong demand in China. That’s in spite of the on-going trade war which, at least for now, doesn’t seem to have dented the brand’s appeal.
Hermes’ share price has risen by 21% so far this year
SOURCE: Yahoo Finance
Hermes, which is famous for its silk scarves and Birkin handbags, saw a 17% rise in net profit for the first six months of the year, measured against the first half of 2017. Recurring operating profitability hit an all time high of 34.5% of sales. The company’s chairman, Axel Dumas, celebrated Hermes “dazzling profitability with record high results” in the period, and said it reflected “a strong rise in sales driven by all business lines and geographical areas.”
On a constant currency basis, the group said that sales rose by 11% against the same period in the previous year to 2.9 billion Euros. That was ahead of market expectations and, vitally important to investors, it looks as though Chinese demand is holding strong. Asia sans Japan saw a 15% rise in sales, year on year.
The reason that matters so much is the outsized impact China has on the luxury sector. Roughly a third of all purchases are made by Chinese consumers, and the current situation with trade has many people spooked. Not so Mr. Dumas, who commented that “there has not been any change in trend [the demand from China] so far.”
Hermes has also seen success with its on-going quest to embrace “omnichannel” platforms – the seamless interaction between online and offline retail experiences – and is considering selling its wares in China through online retail giant JD.com.
Dominion holds Hermes in its Global Trends Luxury Fund.
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