Hermès Says Growth May Slow in 2015

PARIS, France — Hermès International SCA said profitability likely narrowed in 2014 amid currency fluctuations and that revenue growth may slow in the year ahead.

The current operating margin was probably about 31 percent compared to the record 32.4 percent achieved in 2013, Paris- based Hermès said today in a statement. In November, the company said the measure may narrow “slightly.” Quarterly revenue rose to 1.22 billion euros ($1.38 billion) in the final three months of the year, just shy of 1.23 billion-euro median of analysts’ estimates.

Hermès has weathered slowing luxury growth better than many of its peers as high prices, limited supply and distribution help reinforce its elitist appeal. Sales excluding currency moves rose 9.6 percent in the fourth quarter, led by gains in its own stores, said the company, whose Birkin bags cost upwards of $10,000. Still, Hermès said it was aiming for 2015 sales growth of 8 percent at constant exchange rates, below the mid- term annual target for a 10 percent increase made in November.

The sales growth target is “sobering,” said Luca Solca, an analyst at Exane BNP Paribas. Full-year sales climbed 11 percent at constant exchange rates. Hermès will publish earnings figures on March 25.

LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods maker, began unwinding its 23 percent stake in Hermès in December to settle a four-year dispute with its rival's biggest shareholders for accumulating the stock without their knowledge. LVMH Chairman Bernard Arnault and his family now own less than 10 percent of Hermès, according to Bloomberg data.

By: Andrew Roberts; editors: Celeste Perri and Thomas Mulier.