HERMÈS
Quarterly information report as at the end of June 2019
Strong sales momentum over the first half of 2019
(+12 % at constant exchange rates and +15 % at current exchange rates)
Paris, 23 July 2019
The group's consolidated revenue amounted to €3,284 million in the first half of 2019, up +12 % at constant exchange rates and +15 % at current exchange rates. Sales growth was very solid in the group's stores (+13 % at constant exchange rates).
The sustained growth in the second quarter (+12 % at constant exchange rates and +15 % at current exchange rates) is in line with the trends seen over the first three months of the year.
Axel Dumas, Executive Chairman of Hermès, said: "Hermès sales were very dynamic in the first half of 2019, in all regions and in all business lines. This sound growth reflects the House’s creative drive, outstanding know-how, and the relevance of its craftsmanship model which helps strengthen local integration."
Sales by geographical area at the end of June
(at comparable exchange rates, unless otherwise indicated)
In the first half of 2019, revenue increased in all geographical areas worldwide:
Sales by business line at the end of June
(at comparable exchange rates, unless otherwise indicated)
The momentum in the first half was driven by solid growth across all business lines, with a remarkable performance of the Ready-to-Wear and Accessories division.
Growth in Leather Goods and Saddlery (+12 %) was particularly sustained over the first half of the year, based on collections blending style, know-how and diversity of materials. The division's annual growth target remains unchanged. Demand remains very high, both for the Maison's classics and other models, such as the Mosaïque and 24/24 bags. The increase in production capacities continued, with the ground breaking of the Maroquinerie de Guyenne workshop in June, scheduled for completion in 2020, and the announcement of a new workshop in Louviers by 2021. Hermès continues to strengthen its local integration in France with the opening of a training centre in Fitilieu (Isère), and the announced extension of the Ganterie-Maroquinerie de Saint-Junien workshop (Limousin region).
The Ready-to-Wear and Accessories division (+15 %) pursued its strong growth, thanks to the success of the men's and women's ready-to-wear collections and of fashion accessories and shoes.
The Silk and Textiles business line (+4 %) confirmed it positive momentum, benefitting from sustained demand and the diversity of materials, outstanding creativity and know-how. The Pierre Bénite site (Rhône) will be extended to support development and will accommodate two new printing lines.
Driven by the success of Terre d’Hermès and the new creation, Un Jardin sur la Lagune, Perfumes (+3 %) posted an increase, despite a high comparison basis at the beginning of last year following the launches of Twilly d’Hermès and Eau de Citron noir.
The Watches business line (+14 %) performed very well, reflecting the creativity of the collections. The Galop d’Hermès model, inspired by the harness collections, received a very warm welcome.
Other Hermès business lines (+19 %) recorded a positive increase over the period, both in Jewellery and in the Home universe.
Highlights
At the end of June, currency fluctuations were favourable, representing a positive impact of €90 million on revenue.
During the first six months, Hermès International redeemed 56,030 shares for €34 million, excluding transactions completed within the framework of the liquidity contract.
2019 half year results and IFRS 16
The half year results will be published on 11 September.
The Hermès Group will apply the IFRS16 Leases standard retrospectively from 1 January 2019. Accordingly, the 2018 interim financial statements will be restated and presented as if this new standard had always been applied. Although practically neutral in terms of net profit, this first application should increase the recurring operating margin1 of each period by approximately 0.5 pt.
At the end of June, the current operating profitability should be slightly below the record level published2 in the first half of 2018 (34.5 %), thanks to the leverage effect generated by strong sales growth, which should partially offset the unfavorable impact of exchange rate hedges.
[1] Recurring operating income is one of the main performance indicators monitored by Group Management. It excludes non-recurring items having a significant impact that could affect the understanding of the Group's economic performance. For memory, at the end of June 2018, the €53 million in capital gains resulting from the sale of the former Galleria store premises in Hong Kong was excluded from recurring operating income.
2 Before application of IFRS 16.
Outlook
In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the Group confirms an ambitious goal for revenue growth at constant exchange rates.
Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, maintaining control over know-how and singular communication.
In the pursuit of dreams is the theme of the year 2019. Celebrating the dream of Hermès means asserting the need to dare to see further, to open the field of the imagination that stimulates creation.
The press release on revenue at the end of June 2019 is available on the Group's website:
Upcoming events:
INFORMATION BY GEOGRAPHICAL ZONE (1)
| First Half | Evolutions | ||||
| In €M | 2019 | 2018 | Published | At constant exchange rates | |
| France | 405.8 | 390.3 | 4.0% | 4.0% | |
| Europe (excl. France) | 544.6 | 500.7 | 8.8% | 8.8% | |
| Total Europe | 950.4 | 891.1 | 6.7% | 6.7% | |
| Japan | 400.6 | 344.8 | 16.2% | 9.8% | |
| Asia Pacific (excl. Japan) | 1,299.3 | 1,072.8 | 21.1% | 17.7% | |
| Total Asia | 1,700.0 | 1,417.6 | 19.9% | 15.8% | |
| Americas | 569.2 | 489.9 | 16.2% | 9.8% | |
| Other | 64.6 | 54.8 | 17.8% | 17.7% | |
| TOTAL | 3,284.2 | 2,853.4 | 15.1% | 12.0% | |
| 2nd quarter | Evolutions | ||||
| In €M | 2019 | 2018 | Published | At constant exchange rates | |
| France | 221.0 | 208.1 | 6.2% | 6.2% | |
| Europe (excl. France) | 283.0 | 261.5 | 8.2% | 8.3% | |
| Total Europe | 504.0 | 469.6 | 7.3% | 7.3% | |
| Japan | 196.5 | 169.8 | 15.7% | 9.9% | |
| Asia Pacific (excl. Japan) | 643.4 | 533.1 | 20.7% | 18.6% | |
| Total Asia | 839.9 | 702.9 | 19.5% | 16.5% | |
| Americas | 299.6 | 259.7 | 15.4% | 9.8% | |
| Other | 31.1 | 27.4 | 13.3% | 13.2% | |
| TOTAL | 1,674.5 | 1,459.6 | 14.7% | 12.3% | |
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(1) Sales by destination.
INFORMATION BY SECTOR
| First Half | Evolutions | ||||
| In €M | 2019 | 2018 | Published | At constant exchange rates | |
| Leather Goods-Saddlery (1) | 1,652.4 | 1,425.1 | 16.0% | 12.4% | |
| Ready-to-wear and Fashion accessories (2) | 754.6 | 637.3 | 18.4% | 15.2% | |
| Silk and Textiles | 266.6 | 249.4 | 6.9% | 4.0% | |
| Other Hermès sectors (3) | 247.6 | 201.7 | 22.8% | 19.4% | |
| Perfumes | 158.7 | 153.2 | 3.6% | 3.2% | |
| Watches | 90.5 | 77.0 | 17.6% | 14.2% | |
| Other products (4) | 113.9 | 109.8 | 3.7% | 2.4% | |
| TOTAL | 3,284.2 | 2,853.4 | 15.1% | 12.0% | |
| 2nd quarter | Evolutions | ||||
| In €M | 2019 | 2018 | Published | At constant exchange rates | |
| Leather Goods-Saddlery (1) | 844.2 | 733.7 | 15.1% | 12.2% | |
| Ready-to-wear and Fashion accessories (2) | 394.4 | 330.7 | 19.3% | 16.9% | |
| Silk and Textiles | 126.2 | 117.0 | 7.8% | 5.8% | |
| Other Hermès sectors (3) | 130.9 | 106.1 | 23.4% | 20.8% | |
| Perfumes | 74.1 | 71.3 | 3.9% | 3.5% | |
| Watches | 47.1 | 42.7 | 10.1% | 7.6% | |
| Other products (4) | 57.7 | 58.0 | (0.5)% | (1.5)% | |
| TOTAL | 1,674.5 | 1,459.6 | 14.7% | 12.3% | |
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(1) The “Leather Goods-Saddlery” business line includes bags, riding, diaries and small leather goods.
(2) The “Ready-to-wear and Accessories” division includes Hermès Ready-to-wear for men and women, belts, fashion accessories, gloves, hats and shoes.
(3) The “Other Hermès business lines” include Jewellery and Hermès home products (Art of Living and Hermès Tableware).
(4) The “Other products” include the production activities carried out on behalf of non-group brands (textile printing, tanning…), as well as the John Lobb, Saint-Louis, Puiforcat and Shang Xia products.
REMINDER OF PREVIOUS PUBLICATIONS
INFORMATION BY GEOGRAPHICAL ZONE (a)
| 1st quarter | Evolutions | ||||
| In €M | 2019 | 2018 | Published | At constant exchange rates | |
| France | 184.8 | 182.2 | 1.4% | 1.4% | |
| Europe (excl. France) | 261.6 | 239.3 | 9.3% | 9.5% | |
| Total Europe | 446.4 | 421.5 | 5.9% | 6.0% | |
| Japan | 204.2 | 174.9 | 16.7% | 9.7% | |
| Asia Pacific (excl. Japan) | 655.9 | 539.8 | 21.5% | 16.9% | |
| Total Asia | 860.1 | 714.7 | 20.3% | 15.1% | |
| Americas | 269.7 | 230.2 | 17.1% | 9.8% | |
| Other | 33.5 | 27.4 | 22.3% | 22.2% | |
| TOTAL | 1,609.7 | 1,393.8 | 15.5% | 11.6% | |
(a) Sales by destination.
INFORMATION BY SECTOR
| 1st quarter | Evolutions | ||||
| In €M | 2019 | 2018 | 2019 | At constant exchange rates | |
| Leather Goods-Saddlery (1) | 808.2 | 691.3 | 16.9% | 12.5% | |
| Ready-to-wear and Fashion accessories (2) | 360.2 | 306.6 | 17.5% | 13.4% | |
| Silk and Textiles | 140.4 | 132.4 | 6.0% | 2.5% | |
| Other Hermès sectors (3) | 116.7 | 95.6 | 22.1% | 18.0% | |
| Perfumes | 84.6 | 81.9 | 3.3% | 3.0% | |
| Watches | 43.4 | 34.2 | 26.9% | 22.3% | |
| Other products (4) | 56.2 | 51.8 | 8.5% | 6.8% | |
| TOTAL | 1,609.7 | 1,393.8 | 15.5% | 11.6% | |
(1) The “Leather Goods-Saddlery” business line includes bags, riding, diaries and small leather goods.
(2) The “Ready-to-wear and Accessories” division includes Hermès Ready-to-wear for men and women, belts, fashion accessories, gloves, hats and shoes.
(3) The “Other Hermès business lines” include Jewellery and Hermès home products (Art of Living and Hermès Tableware).
(4) The “Other products” include the production activities carried out on behalf of non-group brands (textile printing, tanning…), as well as the John Lobb, Saint-Louis, Puiforcat and Shang Xia products.
REMINDER – 2018 KEY FIGURES
| In million euros | FY 2018 | FY 2017 |
| Revenue | 5,966 | 5,549 |
| Growth at current exchange rates vs. n-1 | 7.5% | 6.7% |
| Growth at constant exchange rates vs. n-1 (1) | 10.4% | 8.6% |
| Recurring operating income (2) | 2,045 | 1,922 |
| in % of revenue | 34.3% | 34.6% |
| Operating income | 2,098 | 1,922 |
| in % of revenue | 35.2% | 34.6% |
| Net profit – Group share | 1,405 | 1,221 |
| in % of revenue | 23.5% | 22.0% |
| Operating cash flows | 1,683 | 1,580 |
| Free cash flow (3) | 1,447 | 1,340 |
| Operating investments | 312 | 265 |
| Equity – Group share | 5,503 | 5,039 |
| Net cash position IFRS | 3,465 | 2,912 |
| Restated net cash position (4) | 3,615 | 3,050 |
| Workforce (number of employees) | 14,284 | 13,483 |
(1) Growth at constant exchange rates is calculated by applying, for each currency, the average exchange rates of the previous period to the revenue of the period.
(2) Recurring operating income is one of the main performance indicators followed by the Group’s management. It excludes non-recurring items having a significant impact that could affect understanding of the Group’s economic performance.
(3) Free cash flow = operating cash flows + change in working capital requirement – operating investments.
(4) Restated net cash includes cash investments that do not meet IFRS cash equivalents criteria as a result of their original maturity of more than three months.
The press release and the presentation of the 2018 Results are available on the Group's website: https://finance.hermes.com
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