Hermes, the makers of the iconic Birkin bag and silk scarves, defied all expectations and beat profit forecasts in 2015.
The luxury goods maker said in its 2015 results statement that sales in Europe and Japan were so good that it offset cratering China revenue due to the huge anticorruption and anti-extravagance campaign led by President Xi Jinping which has transformed China’s burgeoning luxury-goods sector forever.
Here are the highlights:
- Revenue rose 18% year-on-year to €4.84 billion.
- Operating profit hit €1.54 billion — ahead of analyst expectations at €1.52 billion.
- Net income rose to €973 million, up from €859 million the previous year.
- Japan sales grew by 18% — this is massive compared to Asia sales growth of just 5%.
What Hermes has done over the last year is pretty impressive. Luxury goods have become less accessible to the growing Chinese middle class and less acceptable for members of China’s elite after the corruption crackdown.
Still, Bain & Company’s 2014 China Luxury Market Study, which was released at the beginning of last year, showed that China’s luxury-goods industry accounted for 29% of the global market. So being able to grow a luxury brand in this environment is a big deal.
So buoying up sales and profits elsewhere is one mean feat.
It is the latest luxury goods company that has managed to capture wealthy clients’ imagination again with iconic products.
luxury and sportswear group Kering showed in its 2015 financial results that people are also loving Gucci once more and its sales in Europe and Japan are helping offset the decline in revenue in China.
Revenue in the fourth quarter jumped 16%, mainly because of the resurgence in popularity for its Gucci brand. Gucci sales rose 13% in the fourth quarter.
Kering also owns brands such as Bottega Veneta and Yves Saint Laurent, but Gucci was its star performer.
It added that shoppers in Western Europe and Japan were buying more. In fact, overall luxury goods revenue in Western Europe rose by 13%, and Japan posted a “third year of strong growth” with a 13.7% rise in sales.
Overall, Kering said sales in 2015 rose by 15.4% to €11.5 billion (£8.9 billion, $12.8 billion) from the previous year.