Despite currency fluctuations knocking out €104 million (US$124.5 million) of revenue, Hermes International reports solid first-quarter sales with China again a hero.
Excluding Japan, Asia achieved 16 per cent growth. Japan continued with outstanding growth of 8 per cent. In January, the group opened a Landmark Prince’s flagship store in Hong Kong.
The French luxury fashion group’s consolidated revenue for the period amounted to € 1.3 billion, up 11 per cent at constant exchange rates and 3 per cent at current exchange rates with the strengthening of the euro.
“This solid performance is the result of the well-balanced sales growth,” says executive chairman Axel Dumas. “It is particularly healthy as it is mainly based on an increase in volumes in the group’s stores.”
Performance was driven by sound growth across all business lines, led by a 17 per cent jump in the ready-to-wear and accessories division. Perfumes also performed with 16 per cent growth.
Meanwhile, Hermes Group finalised the sale of its former Galleria store on April 12, expected to generate a net capital gain of about €50 million.
Hermes Logistics Technologies (HLT) has gone live with its new Cargo Management System (CMS) version, called Hermes 5 (H5), at ALS Cargo Terminal Co., Ltd (ALSC), Noi Bai International Airport in Hanoi, Vietnam.
H5, which will be rolled out globally, future proofs Hermes’ CMS application by modernising its framework to allow for simpler integration with new technologies and opening up Hermes through APIs and new messaging channels.
Additionally, the ability to run within any Cloud, private or public, makes H5 simpler to implement for Cloud ready customers.
ALSC and its customers benefit from a faster and more controlled service, with hand-held device functionality, intelligent warehouse task steering and real-time Service Level Agreement (SLA) monitoring.
“Our new version offers ALSC bespoke, pre-advice messaging between its hub and satellite warehouses to gain key task visibility and efficiencies in cargo transfer times,” said Yuval Baruch, Chief Executive Officer (CEO), Hermes Logistics Technologies.
“In driving the ALSC implementation, the HLT team of cargo and technical experts provided on-site support to ALSC contributing to successfully getting the system live with a number of its customers.
“The preparation and training towards this go-live, as well as working together shoulder to shoulder with the ALSC team during the go-live week, enabled ALSC to independently roll out its remaining airlines efficiently and on schedule, with remote support from Hermes.
“We provided best-in-practice process framework for the handling of sensitive and special cargo, in addition to a wealth of Big Data that is used to effectively analyse and demonstrate the quality of service provision.”
H5 is the latest version in a suite of Hermes’ applications and includes HERMES Cargo Management System (CMS), HERMES Hub Management System (HMS) and HERMES Business Intelligence (HBI).
“With the vision of becoming the pioneering cargo handling terminal in the region, ALSC chose H5, the newest version of Hermes’ CMS,” said Le Thanh Binh, Deputy Director, ALS Cargo Terminal Co., Ltd.
“Thanks to the support from Hermes, from business study to on-site and remote support, we have successfully implemented the new system for all of our customers.
“The innovative design of H5 brings us a new experience in terms of service provision, performance control and user interaction.
“We strongly believe that under the customer-oriented leadership of Mr. Yuval Baruch, HLT and Hermes 5 shall continuously be upgraded to offer a competitive advantage to our Terminal and bring more value to our Airline, Consignee and Shipper customers.”
Hermes recently appointed Alexis Labonne as its new Chief Technology Officer to lead the Hermes team in rolling out H5.
Despite losing popularity with American teenagers and a drop in brand value of 41 per cent, Nike is still way out in front in the Brand Finance Top 50 list of the most valuable apparel brands in the world.
In the list, just been release by the independent brand valuation and strategy consultancy, Nike’s main competitor Adidas was fourth behind H&M and Zara with an increase in brand value of 41 per cent.
In the realm of luxury brands, Hermes overtook Louis Vuitton, jumping two spots from 7th to 5th from last year. Luxury brands including Cartier, Gucci, Hermes and LV had strong growth in value as more consumers in emerging markets buy into the market.
Japan’s Uniqlo was the only Asian brand in the top 10, with Hong Kong jeweller Chow Tai Fook and China’s Anta Sports taking up the 13th and 33rd spots respectively.
These are the top 50 most-valuable apparel brands in the world this year:
Nike (brand value, US$2.8 billion)
H&M ($1.8 billion)
Zara ($1.7 billion)
Adidas ($1.4 billion)
Hermes ($11.3 billion)
Louis Vuitton ($10.4 billion)
Cartier ($9.8 billion)
Gucci ($8.5 billion
Uniqlo ($8 billion)
Rolex ($6.3 billion)
Coach ($6.1 billion); 12. Victoria’s Secret ($6.1 billion); 13. Chow Tai Fook ($5 billion); 14. Tiffany & Co ($4.6 billion); 15. Burberry ($4.5 billion);16. Christian Dior ($4 billion); 17. Polo Ralph Lauren ($4 billion); 18. Prada ($3.8 billion); 19. Under Armour ($3.7 billion); 20. Armani ($3.5 billion)
Puma ($3.3 billion); 22. Ray-Ban ($3.2 billion); 23. Omega ($3.1 billion); 24. The North Face ($3.1 billion); 25. Pandora ($3 billion); 26. Michael Kors ($2.7 billion); 27. Tommy Hilfiger ($2.6 billion); 28. Anta ($2.6 billion); 29. Old Navy ($2.3 billion); 30. Bulgari ($2.2 billion)
Hermes Asia sales grew 11.3 per cent last year to €1.946 billion (US$2.4 billion) as the luxury retailer set a new record for gross retail margin.
The company said the retail market was improving in Hong Kong and Macau, with the Asian market “pursuing its upward curve” and positive outlooks in Mainland China and South Asian countries.
Growth was aided by store revamps at Sogo Fuxing in Taiwan, Elements mall in Hong Kong and at Kuala Lumpur.
Sales in Japan (separated from Asia results) rose 4 per cent to €724.1 million, despite a high comparison figure from last year, which the company described as “a sustained increase” in what is a mature market, citing a selective distribution network.
Group sales totalled €5.549 billion (US$6.863 billion), up 9 per cent at constant exchange rates. Operating income rose 13 per cent, to €1.922 billion, representing a record 34.6 per cent gross margin, while net profit rose 11 per cent to €1.221 billion.
“Hermes achieved a new year of historic results, thanks to the quality of our know-how, the success of our creations and especially the incredible commitment of the women and men of Hermes,” said executive chairman Axel Dumas.
Hermes will ramp up its online offer in the region this year, with a new website scheduled to go live in China at the end of this year.
Meanwhile, the company said the sale of the Galleria building in Hong Kong’s Central district, which previously housed its flagship store, would likely generate a net capital gain of €50 million this year.
Leather drives growth
By category, Hermes’ leather goods proved the strongest performer last year, sales rising 10 per cent globally, reflecting increased production capacity as demand rose for its handbags.
The ready-to-wear and accessories division grew 9 per cent, driven by the success of new collections, fashion accessories and particularly shoes.
Sales of silk and textile products grew 6 per cent and of perfumes by 10 per cent, largely due to the successful launch of Twilly d’Hermes.
Watch sales grew just 1 per cent with what Hermes described as “good sales” in company-owned stores. Other Hermes business lines- jewellery, Art of Living and Hermes Table Arts, grew sales by 11 per cent.
Asia’s pre-owned luxury fashion market is continuing to grow, with shoes and t-shirts gaining ground, according to multichannel retailer Reebonz.
Although bags continued to dominate, with an average of 77 per cent of total transactions in 2016 and 2017, both shoes and apparel achieved steep sales growth throughout the region, according to Reebonz’s now annual Asia Luxury Index.
In Hong Kong, for example, sales of used branded sneakers rose 48 per cent last year, while “luxury t-shirt” sales soared six-fold.
The report is based on Reebonz’s own trading data across Australia, China, Hong Kong, Indonesia, Malaysia, New Zealand and Singapore, along with unspecified “industry reports”.
Reebonz says millennials are driving the sector’s growth, “tilting the scales in favour of a pre-owned luxury market that continues its growth trajectory”.
Chanel, the most-purchased pre-owned brand by millennials, recorded more than double the total sales value on Reebonz last year over 2016.
The report said the changing perceptions towards pre-owned luxury have altered the state of resale and how consumers shop today, contributing to 40 per cent sales growth in the pre-owned category at Reebonz.
“The growing demands of buying from the resale market cleverly gives rise to a community of individual sellers, injecting the luxury ecosystem with products that meet these needs,” said Reebonz cofounder Daniel Lim.
Louis Vuitton, Hermes and Chanel were the three top-selling brands on Reebonz last year, fetching resale values as high as 125 per cent of their original retail price in the secondary market. Gucci, Celine and Dior were also among the top 10.
Hermes international sales showed strong growth last year, pushed by an upward curve in Asia.
Sales for the French fashion brand were up 9 per cent at constant exchange rates, with consolidated revenues reaching €5.5 billion (US$6.7 billion). After adjustment for the negative currency effect resulting from the year-end strengthening of the euro, the increase was 7 per cent.
In the final quarter growth was sustained at 5 per cent at constant exchange rates.
During the year Hermes continued to improve its distribution network, renovating and extending almost 20 stores. It launched websites in Canada and the US, to be followed by China at the end of this year.
Asia, excluding Japan, saw sales rise 11 per cent with a positive outlook in Mainland China and South Asia.
Hermes says the context is improving in Hong Kong and Macau. Regional stores were extended and renovated – the Sogo Fuxing store in Taiwan, Kowloon Elements in Hong Kong and the Kuala Lumpur store.
Despite a high comparison basis, Japan recorded a sustained increase of 4 per cent thanks to its selective distribution network.
All sectors recorded growth, with a “remarkable” performance by the ready-to-wear and accessories, perfumes and other sectors.
Leather goods and saddlery sales grew 10 per cent to meet demand for such bags as Constance, Halzan, Lindy and Verrou. Shoes particularly boosted sales in the ready-to-wear and accessories division, up 9 per cent, silk and textiles had a 6 per cent rise, while the perfumes division posted 10 per cent growth with the launch of Twilly d’Hermes.
There was a 1 per cent rise in watch sales, while other Hermes business lines ‒ encompassing jewellery, Art of Living and Hermes Table Arts ‒ rose 11 per cent.
Currency fluctuations had a negative impact of €100 million on revenues.
The company will publish its annual results next month.
Historic British footwear brand John Lobb Bootmaker has stepped into the Philippines with a store beside Hermes at Greenbelt 3 in Makati City, Manila.
Founded in Basingstoke in 1849 and opening a store on London’s Regent Street in 1866, the brand is known for its bespoke services and patronage from the aristocracy as well as the social, political and business elite.
John Lobb branched out being solely bespoke to enter the ready-to-wear world in the 1980s.
“Going into retail was a natural progression for the brand,” says regional director Nicholas Holt. “The stores have grown organically; we have 24 all over the world, targeting key cities such as Manila.
“We open stores only in strategic locations – it is not all a matter of how many doors we can open.”
While it makes shoes and boots mainly for men, John Lobb also caters for women. The store also sells leather goods such as wallets and belts.
John Lobb, now owned by Hermes, has stores in China, Japan, South Korea and Taiwan.
British property developer Chelsfield has bought the ground floor of The Galleria shopping centre in Central from French luxury brand Hermes for HK$900 million (US$115 million).
Comprising four retail shop units and a basement, the floor has a combined area of 7100sqft (660sqm).
Hermes makes a profit of $710 million through the sale of its former flagship space, after buying up the component units in succession since 2000 for a total of $190 million.
After deciding in 2016 to relocate its flagship to Prince’s Building, just a five-minute walk away, Hermes put the floor on the market.
For Chelsfield, the deal is its second acquisition of a commercial property in Hong Kong within a month. It partnered with Hong Kong real-estate investment firm Pamfleet to buy a shopping centre in North Point last month for $2 billion from Fortune Reit.
Chelsfield expanded to Asia in 2016, when it took over the real-estate division of the Dymon Asia Group. The Asia arm of the UK firm is now run by Dymon’s former management team led by former Grosvenor executive Nick Loup, who joined Chelsfield in 2015 as part of the takeover.
On 11 January 2018, Hermès opened the door of its new store in Hong Kong, the original and first home in Greater China.
Located in Landmark Prince’s, within the dynamic Central district on the corner of Ice House Street and Des Voeux Road, this new destination marks a significant milestone for Hermès and is a delightful occasion to celebrate the long-standing relationship
between Hong Kong and our house.
The relationship between Hermès and Hong Kong started with the first store in the city
in 1975, followed by a dynamic expansion with a current network of seven shops in key locations. The Hermès homes host outstanding events and exhibitions, whilst encouraging a constant dialogue between craftsmanship and the effervescent local culture.
For the opening, Axel Dumas, CEO of Hermès, welcomed the guests and walked them through the three-floor majestic Orange Box.
Designed and built by the Parisian architecture agency RDAI under the artistic direction of Denis Montel, the edifice draws its stylistic influences from local architecture.
The design is inspired by bamboo scaffolding construction techniques, the copper-coloured anodised aluminum facade asserts the rhythm and verticality of bamboo.
Eight kilometres of rectangular tubes align to form a mantle with kinetic effects. This storefront of a thousand reflections allows glimpses of a ground floor, a mezzanine level and an upper floor – three levels totalling 9,167 square feet of retail and reception space.
The aluminium facade rises a further two storeys, accentuating the presence
of Hermès at this strategic crossroads in the city. The building’s pre-existing structure – comprising numerous pillars and a low ceiling height – required the architects to draw upon their constructive prowess.
The building benefits from natural light enabled to penetrate throughout. Staircases and daylight cascade down the openings. The three floor areas have been subdivided using openwork screens and mobile partitions to create small lounges and private salons.
On the upper level, it gives way to a balcony from which the city, its skyscrapers and its double-decker tram can be admired.
The store has two entrances. The main door, located on Ice House Street, opens onto spaces dedicated to women’s silk, fragrances, and jewellery accessories.
Source : Hermès
The second entrance, on Des Voeux Road, leads to the men’s universe, with silk, shoes, leather goods, ready-to-wear and a private lounge for made-to measure. The mezzanine is formed of a succession of alcoves on either side of the central space, offering an exclusive setting for jewellery. It is home to the women’s universe, with ready-to-wear, gloves, hats, watches, leather goods, and even a powder lounge, a precious and private boudoir.
The upper floor accommodates the home universe: furniture, lighting, furnishing fabrics and wallpapers, tableware, and offers guests a lounge where to enjoy the comfort of Hermès home.
Source : Hermès
The floor, in mosaic on the ground floor and bamboo parquet elsewhere, is in places covered with rugs that incorporate the pattern of bamboo fibres.
Source : Hermès
The interior design features lacquered wood, leather, stucco, marble, and woven metal. A palette of warm colours ranging from the sandy hue of the women’s universe to the burnt wood shade of the men’s universe. Elements in champagne-coloured woven metal subdivide the spaces.
The extensive use of glass on both façades suffuses the store with golden light. Filtered by a forest of bamboo in the heart of the urban jungle, it allows a sophisticated nature to regain its rights and powers. In an ultimate act of celebration, Hermès has invited the French duo of artists ZIM & ZOU to transform the store windows with delicate humour into enchanted paper castles.
The opening was followed by a party in the West Kowloon Cultural District of Hong Kong to link Hermès to the local artistic culture.
The Orange Box of Hermès is an interwoven space of the brand heritage. It is a celebration of art and craftsmaship, which stands out for its delicate and warm colours. While walking through the three floor, the retail space resembles an art gallery and the products are showcased as if they were artworks to be appreciated more than purchased.
Isn’t it the image of luxury we all have depicted in our mind and that today seems to be lost?
Louis Vuitton Korea has fallen behind its rivals, with sales dipping into minus territory this year, industry data shows.
Sales at a leading department store for the international fashion house for the January-October period backtracked 5.3 per cent. Demand for Louis Vuitton products were down 2.1 per cent at another department store during the same period.
Meanwhile, rivals Chanel and Hermes achieved double-digit sales during the same period. Chanel added 11.2 per cent and 13.7 per cent at the two department stores, while Hermes managed 16.5 per cent and 17.1 per cent growth, respectively.
“The vast popularity of Louis Vuitton in the past and consequent sales have made the brand too common, taking away much of its cachet,” an unidentified retailer said. “The popularity of its monogram series fizzled out, and there was no succeeding product, which is another reason for the slump,” he said.
Exact sales figures are not available for Louis Vuitton, after its local operator was turned into a privately-held company from a limited company in 2012 when its lack of social contribution compared to its dividend propensity became controversial. Privately-held firms do not have to disclose detailed corporate information, such as donations.
A law was revised recently, however, requiring private companies to undergo external inspections and to disclose financial information, including sales, dividend rates and contributions.
Sales momentum in Mainland China helped boost growth for French luxury retailer Hermes in its third quarter.
Overall sales grew 11 per cent at constant exchange rates, and at the end of September revenues were up 10 per cent to €4 billion (US$4.6 billion).
Despite a strong comparison basis, sales in Asia (excluding Japan) rose 14 per cent, while Japan achieved a solid performance with a 5 per cent increase in the face of a strengthening yen.
Hermes says all sectors recorded growth, with a “remarkable” 11 per cent performance by ready-to-wear and accessories.
The 11 per cent growth in leather goods and saddlery was in line with the annual target of around 10 per cent, says the company, thanks to the success of its collections and diversity of models, particularly the Constance, Halzan, Lindy and Verrou bags, alongside Birkin and Kelly.
With 9 per cent growth, the silk and textiles business line benefited from sustained demand, the diversity of the collections and the wealth of the creations, says Hermes.
Strong growth of 13 per cent was posted by the perfumes division, driven notably by the launch of Twilly d’Hermes.
There was a slight 1 per cent improvement for watches, while other lines grew by 11 per cent, including jewellery, art of living, and table arts.
French luxury brand Hermès launched its very first WeChat pop-up store, a strategic move signaling the brand’s ambition to step up its digital innovation in China. But it also raises the question of just how aggressive it can be in the digital space.
The WeChat post by the brand to introduce the pop-up store has a 13-second promotional video about the new Éperon d’Or Hermès x Apple Watch.
The product, in collaboration with Apple, features the classic pattern of Hermès scarf on the wristband. The pop-up store will last for two weeks.
When clicking on “read more” at the bottom of the post, readers are taken directly to Hermes’ watch collection page which offers a detailed view of six models.
The prices range from 8,988 yuan ($1354) to 10,988 yuan ($1655). Buyers need to register an account with the site—leaving their phone number and other relevant information—to track the order, and they must use WeChat Pay to complete the deals.
Chinese consumers have shown high interest in Hermès’ WeChat offering: by the time of this publication, the post had attracted 15,986 pageviews.
According to Hermès’ earnings results of the first six months of 2017, China led the growth in the Asia-Pacific region, contributing 14 percent to the region’s total revenues.
The brand continues to see rising interest among Chinese customers in purchasing its signature handbags, namely the Birkin Kelly, Constance, and Lindy models.
“We have really seen a recovery of China,” the global chief executive of Hermès International Group Axel Dumas said in an interview with Financial Times, “and the beginning of growth again in Hong Kong and Macau.”
For Hermès, the rebound of luxury consumption in China posed the question of how it can best capture the demand in the market for digital shopping.
Compared to many other luxury powerhouses, Hermès is a latecomer to the digital shopping game in China.
Hermès set a textbook example for hunger marketing, a strategy often deployed by brands to make consumers feel hungry for certain type products through a limited number of offers. Hermes has used this strategy before to promote the Birkin bag. With limited time and quantity, the offer of Apple Watch in the WeChat store has employed a similar technique.
However, this strategy of utilizing a sense of urgency is certainly not a new approach. Many brands, namely Dior, Longchamp, and Bulgari, were early adopters of WeChat flash sales, making headlines with impressive sales numbers from the flash sales. For example, during last year’s Chinese Valentine’s Day, Dior offered a Lady Dior handbag for 28,000RMB ($4,210) for four days; the media reported that all 200 models were sold out by 2 August 2017.
As the brand’s key rivals like Louis Vuitton and Gucci are selling online in China, there is a possibility for Hermès to open an exclusive e-commerce site for the country’s consumers, too.
There might be reasons why Hermès has been slow to adopt this digital trend; it is a reflection of a general attitude of the luxury industry to digital change.
They face many questions such as whether going digital can deliver the same luxury experience to consumers, or if it can become a steady purchase channel for high-priced goods. Luckily, the past experiences of early adopters show that the value of luxury can still be held if the brands approach it appropriately.
For Hermès, it is going to be a task to balance exclusivity and availability on the digital channel in China and their answer to it will set up an example for many luxury brands.
Balenciaga has overtaken Gucci as the hottest fashion label, according to the latest Lyst Index.
The index draws on data analysis by fashion-search platform Lyst in conjunction with the Business of Fashion website. The 4.5 million data points analysed include sales, searches and consumer perceptions of 5 million products and 12,000 brands.
Its result is despite Louis Vuitton, Hermes and Gucci being named best fashion brands globally just last month by Interbrand consultancy.
Ranking the world’s hottest brands and top-selling products, the Lyst Index ranked Gucci first in this year’s second quarter, followed by Kanye West’s Yeezy and Balenciaga. However, the Spanish fashion brand continued to rise, displacing Gucci in the third quarter, with Virgil Abloh’s Off-White rising to third – a jump of 31 places in three months.
Lyst says Balenciaga’s rise was because of a new logo and the Colette residency in Paris keeping the brand top of mind “while Demna Gvasalia continues to design products that drive the fashion narrative online”.
Additionally, the platform praised Gucci for being a “consistent performer”, reports High Snobiety.
Rounding out the top 10 are Vetements, Givenchy, Valentino then Saint Laurent, while Stone Island leaped from 41st to eighth, followed by Moncler (previously 20th) and finally Raf Simons (previously 21st).
Lyst Index also looked at the most influential rappers in fashion for the quarter, listing (in order) Kanye West, Nicki Minaj, Pharrell Williams, Cardi B, Drake and A$AP Rocky.
A Hermes pop-up store, its first on WeChat, features a 13-second promotional video for its new Eperon d’Or Hermes x Apple smartwatch.
The French luxury brand is offering six options of wristband, each based on a classic Hermes scarf pattern.
When clicking on “read more” at the bottom of the post, readers are taken directly to Hermes’ watch collection page which offers a detailed view of six models. The prices range from RMB8988 (US$1354) to RMB10,988.
Buyers need to register an account on the site to track the order, and use WeChat Pay to complete deals.
The pop-up ends on November 5.
Meanwhile, Hermes sales in Asia Pacific, excluding Japan, have grown by 14.3 per cent year on year. Its WeChat experiment indicates the brand has taken a significant step toward digital marketing, reports CIF News.
CEO Axel Dumas says Hermes has excellent sales track records in China, and has expanded from major cities, gradually developing in growing centres such as Chengdu and Hangzhou.
In a special exhibition, the Hermes Singapore flagship store at Liat Towers has been transformed to spotlight the luxury French brand’s collection of home furnishings and bespoke creations.
Described as a “gallery of whimsy and surprise”, the Through The Walls exhibit was crafted by set designers Jean-Christophe Vaillant and Herve Sauvage. It shifts the focus from the brand’s iconic scarves and Birkin handbags to tableware, lighting, wallpaper and furniture.
Leather, a reminder of Hermes’ start as a saddlemaker, is used imaginatively, as is bamboo crafted with carbon fibre and steel to form seats. The centrepiece of the installation is a closet for scarves that resembles a leather wallet from the outside and stores up to 130 pieces.
Hermes co-deputy artistic director Charlotte Macaux Perelman says Singapore is an ideal location for the exhibition given the brand’s presence in the city since the 1970s. “We have never had a home-furnishings event here or really highlighted our home collection,” she says.
It took two weeks to transform the top two levels of the store to showcase more than 120 objects from the Hermes home universe, including the brand’s new Lien d’Hermes collection.
The retail space has been reworked as a “home” to give an appropriate setting for the objects.
A feature is the stairwells of the store where wallpaper from the collection has been ripped and layered decoupage-style. In one corner, a dining table looks as though it had been pushed through a wall while elsewhere a coffee table appears to have fallen through the roof.
There are even such whimsical touches as sounds: a cat meowing, a door closing, birds’ wings flapping. But the deconstructed world starts in the store windows, where neon signs for the event are framed by plates broken in half.
“As a brand, our pieces are undoubtedly quite traditional and rigorous, but we like to introduce fantasy as well, especially in things like our textiles, wallpaper and tableware,” says Perelman.
