(News Bulletin 247) – Like its rival LVMH, the luxury saddler published quarterly sales that exceeded expectations. The Hermès title is evolving at its zenith, not far from the threshold of 2,000 euros.

French luxury companies are doing like a charm and are popular on the stock market. On Thursday, investors applauded the performance of LVMH, which got the publications ball rolling in the best possible way. The luxury giant shattered expectations, on the occasion of its business update unveiled on Wednesday evening, with growth of 17% over the first three months of the year.

Moreover, the title of Bernard Arnault’s group set a new historic record at the opening of trade on Friday morning (894.50 euros) as did Hermès, which has just revealed very robust activity for the first months of the year. year 2023. Its title is now evolving at the gates of 2,000 euros, and from the first exchanges registered a historic high of 1,984.60 euros. The group crossed last week the threshold of 200 billion euros in capitalization when LVMH easily exceeded 400 billion, making the company the first tenant of the CAC 40.

The performance of the luxury saddler is hailed by the market (+1.2%), even if the reception is more timorous than that reserved for the service of LVMH whose action had increased by 5.7% on Thursday. In its note devoted to the luxury saddler, Deustche Bank provides an element of response: “we believe that the market is already expecting a strong performance and, given the high multiple, we expect a more limited reaction from the price of the action”. Moreover, after the results of LVMH, Hermès had already taken 3.07% on Thursday, investors already anticipating good results.

A quarter “in line with the results of 2022”

The design office nevertheless welcomes the “strong quarterly performance” achieved by the luxury saddler. In the first quarter, the company’s sales exceeded expectations at 3.38 billion euros, up 23% as reported and 22% at constant exchange rates. The consensus compiled by Factset expected, in fact, a turnover of 3.1 billion euros.

“The first quarter of 2023 is a continuation of the good results of 2022”, declares Axel Dumas, the manager of the saddler-leather maker. Hermès’ 2022 turnover had indeed exceeded 10 billion euros for the first time, thanks to the marked increase in its sales in China.

Hermès is pleased with the dynamism of its activity in all the geographical areas where the group is present and in all its businesses. “Despite the economic and geopolitical uncertainties around the world, all geographic areas experienced growth of more than 20%, which is quite exceptional,” explains Antoine Fraysse-Soulier, head of market analysis at e Toro. “Hermès, more than any other brand, enjoys an extraordinary loyalty from its customers, who are ready to pay the price, whatever it costs,” he adds.

The luxury saddler network continued to develop with store openings and extensions and the strengthening of online sales. Activity grew by 23% at constant exchange rates, in the group’s stores and wholesale sales (+26%) benefited from the rebound in sales to travelers

In detail, sales in the Americas zone jumped 19.2% at constant exchange rates, to 556 million euros. Growth in this area “reflects continued strong demand among the wealthiest US consumers,” Deustche Bank notes.

Quoted by AFP, Éric du Halgouët, general manager of finance for the saddler, observes trends that are still favorable in the United States, and “has not noted any downturn [dans le pays] for the moment with a very loyal local clientele”, during a conference call with journalists. While the LVMH group has announced a decline in demand in the country, Hermès nevertheless indicates that it remains “vigilant” on trends macroeconomics.

Asia excluding Japan, up 22.5% at constant exchange rates, driven by “a very good Chinese New Year” continues its strong momentum in Greater China and throughout the region, particularly in Singapore, Thailand and in Australia. “Asia was strong as expected,” added the research department. Sales in Europe increased by 23.9%, particularly in the United Kingdom and Italy, driven by the increase in tourist flows.

The core business, in great shape

As for the group’s divisions, the activity of the leather goods and saddlery division, Hermès’ core business, increased by 18.5% (at constant exchange rates) to 1.4 billion euros. “Leather goods growth at +19% is well above expectations, which should support margin forecasts but raises some concerns about capacity for the end of the year”, abounds Deustche Bank.

To meet an explosion in demand, Hermès inaugurated a new leather goods store in the Eure department in early April. The group is studying four other manufacturing projects in Tournes-Cliron (Ardennes), Riom (Puy de Dôme), L’Isle-d’Espagnac (Charente) and Loupes (Gironde). Regarding the group’s other divisions, the clothing and accessories business grew by 34.4%, the silk and textiles business by 19.6%, perfume and beauty by 6.1% and watchmaking by 24.6%.

True to its tradition, the group did not give any quantified perspective. Hermès merely confirmed its medium-term outlook of an “ambitious objective of increasing turnover at constant rates”, in a context of economic, geopolitical and monetary uncertainties.

“The group is approaching the year 2023 with confidence, on the strength of its highly integrated artisanal model, its balanced distribution network, the creativity of its collections and the loyalty of its customers” adds Hermès by way of outlook.