Hermes Expected to Post Higher Sales, Growth Across Regions -- Earnings Preview

By Andrea Figueras

Hermes is scheduled to report revenue for the first quarter on Thursday. Here is what you need to know.

SALES: The French luxury-handbag maker is expected to book revenue of 3.68 billion euros ($3.92 billion), according to a poll of estimates by 10 analysts compiled by Visible Alpha. That is above the prior-year period, when revenue was EUR3.38 billion.

At 0908 GMT, shares in Hermes were up about 22% since the start of 2024, and around 17% higher compared with a year ago.

WHAT TO WATCH:

-- POLARIZATION TRENDS: The luxury sector overall is expected to report a sluggish start to the year, as it continues to grapple with a slowdown in demand. However, there will be a gap between the best and the worst performers, Bank of America analysts said in a note. Companies catering to the wealthiest shoppers should post better results, while those more exposed to status-seeking consumers face a tougher environment. As for Hermes, it should continue to outperform, benefiting from a high-end clientele that tends to be more resilient in times of macroeconomic slowdowns, Barclays analysts said in a note.

-- PRICING: Hermes was likely among the companies enjoying more dynamic sales growth levels in the first quarter, thanks to strong demand, and boosted by significant positive pricing, Bryan Garnier analysts wrote in a note. Strong pricing power and brand desirability should allow Hermes to continue achieving solid growth trends, Barclays said, noting that the brand implemented a price increase of around 8% at the group level during the first three months.

-- GEOGRAPHICAL PRINT: The company is expected to show double-digit revenue growth across all regions, Barclays said. This contrasts with peers such as Gucci owner Kering, which are grappling with a tough environment in China. Kering faces a challenging environment in the country as it seeks to reposition its core label.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

April 23, 2024 05:23 ET (09:23 GMT)

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