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Very good sales momentum and exceptional results in the first half

(Boursier.com) — The group’s consolidated turnover Hermes in the first half of 2022 amounted to 5,475 ME, up 29% at current exchange rates and 23% at constant exchange rates compared to the same period in 2021. Current operating profit amounted to 2,304 ME ( 42% of sales) and net income group share reached 1,641 ME (30% of sales).

Second quarter sales reached 2,710 ME and increased by +26% at current exchange rates and +20% at constant exchange rates, with strong momentum in all businesses.

Axel Dumas, manager of Hermès, declared: “The good momentum of the results of the first half testifies to the growth of our 16 businesses and the strong desirability of our objects, designed by craftsmen in a sustainable approach, without compromising on quality. In a still unstable context, we are moving forward with confidence, faithful to our responsible business model and committed to our employees and partners.”

Activity at the end of June by geographical area
(data at comparable exchange rates, unless explicitly indicated)

In the first half of 2022, all regions posted very solid performances, with Asia holding up well despite the health context in China. Sales in group stores (+23%) benefited from the strengthening of the exclusive omnichannel network and online sales. The growth in wholesale sales (+25%) results in particular from the recovery in sales to travellers.

Asia excluding Japan (+15%) was driven by strong momentum across the region, and in particular by sustained activity in Singapore, Australia and Korea. Greater China rebounded strongly in June, after being penalized by health restrictions and store closures, mainly in Shanghai and Beijing in April and May. After the reopening of the renovated stores at Pacific Place in Hong Kong and One Central in Macao at the start of the year, a new store was successfully inaugurated in Zhengzhou at the end of March, in the province of Henan in China.

Japan (+20%) showed a remarkable performance, which is based on the loyalty of local customers. In June, the first edition of the exhibition The Factory of Lightness, featuring the theme of the year, took place in Tokyo.

America (+34%) continued its very good momentum at the end of June. In the United States, a new store was inaugurated in Austin in April, the House’s third store in Texas. The Hermès in the Making exhibition, around the craftsmanship of the house, was presented in Detroit in June.

Europe excluding France (+34%) and France (+41%) continued their solid growth, thanks to the loyalty of local customers and the recovery in tourist flows, particularly in France, the United Kingdom and Italy.

Activity at the end of June by business
(data at comparable exchange rates, unless explicitly indicated)

At the end of June 2022, all businesses confirmed their strong momentum, with remarkable growth in Silk, Clothing and Accessories, Watches and Other Hermès businesses (Jewellery and Home products), thus underscoring the tremendous attractiveness of the Hermes house.

Growth in Leather Goods & Saddlery (+12%) was based on sustained demand and the increase in production capacity, in line with its annual objective. The customizable RMS (Rolling Mobility Suitcase), the result of exceptional know-how and multiple innovations, has received an excellent reception. Five new leather goods will be rolled out over the next five years, with the Louviers (Eure) and La Sormonne (Ardennes) sites in 2023, and Riom (Puy-de-Dôme) in 2024. The L’Isle- d’Espagnac (Charente) and Loupes (Gironde) have been announced for 2025 and 2026. Hermès is thus continuing to strengthen its territorial roots in France and to develop employment.

The Clothing and Accessories division (+36%) continued its good momentum, driven by the success of the ready-to-wear collections, fashion accessories and shoes. The fall-winter 2022 women’s show, presented in March at the Republican Guard in Paris, received a very warm welcome, as did the spring-summer 2023 men’s collection unveiled at the Manufacture des Gobelins in June. New creations such as the micro Rivale bracelet, the Olympe mono-earring or the Enid sandal, met with great success, alongside the house’s icons, in particular the Hapi and clic H bracelets and the Kelly belt.

The Silk and Textiles business (+29%) made excellent progress, with collections that combine a diversity of materials, formats and new uses, supported by the development of production capacities at the Lyon site of Pierre-Bénite.

Perfume and Beauty (+23%) benefited from the success of the launches of the new chapter of Beauty Hermès Plein Air, dedicated to complexion, and that of lip oils, Hermèsistibles. Perfume was enriched with Terre d’Hermès Eau Givrée, a creation combining freshness and power, and the colognes collection welcomed a new vegetal and airy creation, Eau de Basilic Pourpre, in June.

Watchmaking (+55%) achieved an exceptional performance thanks to the development of pieces with exceptional know-how such as the Arceau Le temps voyageur watch, and the success of its mainstays such as the Heure H and Cape Cod models.

The Other Hermès businesses (+33%) continued their strong momentum, thanks to the Home universe and Jewellery. The world of the House was presented in June at Milan Design Week, with new textile creations and the new Soleil d’Hermès table service. The seventh high jewelry collection called Les jeux de l’ombre, around innovative shapes and know-how brought to their highest level, was presented at the Faubourg Saint-Honoré store in Paris.

Current operating profit increased by +34% and amounted to 2,304 ME, compared to 1,722 ME in the first half of 2021. Thanks to the leverage effect generated by the strong growth in sales and the exceptional collection rate, the current operating profitability reached its highest historical level at 42% compared to 41% at the end of June 2021.

Consolidated net income group share is 1,641 ME (30% of sales) compared to 1,174 ME in the first half of 2021, an increase of +40%.

Operational investments amounted to 190 ME and adjusted free cash flow reached 1,421 ME.

After payment of the ordinary dividend (837 ME) and taking into account share buybacks (115 ME for 103,368 shares excluding the liquidity contract), restated net cash increased by 615 ME and reached 7,685 ME, against 7,070 ME at 31 December 2021.

A sustainable and responsible model

The Hermès group continued its recruitments and increased its workforce by more than 800 people in the first half. At the end of June 2022, the group employed 18,400 people, including 11,500 in France. True to its commitment as a responsible employer, in February 2022 Hermès paid all group employees an exceptional bonus of EUR 3,000 for their commitment for the year 2021, and decided on a gross monthly increase of EUR 100 in France. in addition to the usual increases in January. In June, a second increase of 100 euros gross per month starting in July was announced for all employees in Europe.

Hermès is strengthening its commitment to education and transmission with the launch of the School of Sales Artisans in April. The group is continuing to roll out the Hermès School of know-how with the opening of a new Apprentice Training Center in Charleville-Mézières, within the Ardennes cluster.

The employment of people with disabilities reached a rate of 6.4%, which testifies to the house’s commitment to inclusion.
On July 4, Hermès International received the Grand Prix de la Transparence 2022 all categories, now renamed Transparency Awards, which rewards the quality of regulated information of companies in the
SBF 120.

Prospects displayed

For 2022, it is still difficult to assess the impacts of the health context. The highly integrated artisanal model, the balanced distribution network, the creativity of the collections and the loyalty of the clientele allow us to face the future with confidence.
In the medium term, despite the economic, geopolitical and monetary uncertainties in the world, the group confirms an ambitious objective of revenue growth at constant exchange rates.
Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, mastery of know-how and original communication.

Upcoming events:

October 20, 2022: publication of 3rd quarter 2022 revenue
February 17, 2023: publication of the 2022 annual results
April 14, 2023: publication of 1st quarter 2023 revenue
April 20, 2023: general meeting of shareholders.

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