Bloomberg News

Hermes 2011 Revenue Beats Forecast, Profit Margin Improves

February 09, 2012

(Updates with company forecast in second paragraph, sales by division in sixth, revenue by region in seventh and eighth.)

Feb. 9 (Bloomberg) -- Hermes International SCA, the French maker of Birkin bags and silk scarves, reported full-year sales that beat its own forecast and said the profit margin improved amid strong demand in the Americas and most parts of Asia.

Revenue climbed 18 percent to 2.84 billion euros ($3.78 billion) in 2011, the Paris-based company said today, exceeding its forecast for growth of 15 percent to 16 percent. The average of 16 analysts’ estimates was 2.81 billion euros.

The operating margin widened “significantly” and exceeded 30 percent, according to Hermes, which previously said the profit measure would be “slightly” higher than 2010’s 27.8 percent. The company will report full results on March 22.

Hermes isn’t too worried about the fallout from Europe’s debt crisis as it has more orders than it is able to fulfill, Chief Executive Officer Patrick Thomas said in December. The company, in which LVMH Moet Hennessy Louis Vuitton SA owns a 22.4 percent stake, plans to build two leather factories in France this year to cope with surging demand. Hermes also plans to open or renovate 15 branches in 2012, it said today.

The shares rose as much as 1 percent in Paris trading and were up 0.6 percent at 265.35 euros as of 10:19 a.m.

Sales at the company’s stores rose 19 percent in the year, outpacing growth of 15 percent in the wholesaling unit. Hermes opened 13 outlets, acquired four concessions and renovated or extended eight other stores, it said.

Asia was the company’s fastest-growing region, increasing sales by 29 percent, excluding Japan, where they fell 1 percent after the earthquake at the beginning of the year.

Revenue rose 26 percent in the Americas region and 16 percent in Europe, where the company opened branches in Berlin, Rome, Barcelona and Istanbul.

The luxury-goods maker will pay a dividend of 1.50 euros a share on March 1, it said.

--Editors: Thomas Mulier, Robert Valpuesta.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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