Luxury brand Hermes is projecting and recognizing that, while sales had been steady during the first quarter, the company is going to have flat sales for the rest of the year.
Net income edged up 0.8 percent to 290.2 million euros, or $427 million, in the 12 months ended Dec. 31, beating forecasts and sending Hermes’ shares up 3.8 percent Thursday to close at 74.66 euros, or $97.66, on the Paris Bourse. Operating profits advanced 8.4 percent to 449.2 million euros, or $660.9 million. Dollar figures are converted at average exchange rates for the periods to which they refer.
“The company resisted very well last year: I think the crisis is ahead of us,” Patrick Thomas, chief executive officer, said in an interview. While stressing “it is difficult to make a forecast in the current environment,” Thomas said Hermès is projecting flat sales for 2009, which will have a “slight impact” on profitability this year. “Our core business continues to do well,” he added, citing resilience in leather goods, fashion and accessories. “We are suffering more in jewelry and watches.”
Thomas described a mixed picture geographically and contrasting sales results in its own stores versus wholesale. “China, Hong Kong, Taiwan and Macau are still booming, and European markets are still doing very well,” he said. By contrast, he called business in the U.S. “OK for the moment” and a deteriorating situation in Japan, where “we don’t see the end of the tunnel.”
So that even as this is the case, the luxury retailer intends to open up at least twenty more stores in 2009.