French Luxury Goods Firm Hermes Full-Year Profit Jumps 6.8 Percent

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French Luxury Goods Firm Hermes Full-Year Profit Jumps 6.8 PercentFrench Luxury goods maker Hermes International SCA saw its full-year net profit surge 6.8 percent as controlled distribution and scarcity helped reinforce its elitist appeal, resulting in higher sales.

Net profit for 2013 grew to 790 million euros, while revenue rose 13 percent at constant exchange rates to 3.75 billion euros. The company raised its dividend for 2013 to 2.70 euros, up from 2.50 euros earned in 2012.

Operating profit increased 8.9 percent to 1.218 billion euros ($1.69 billion), while operating margin hit a record-high of 32.4 percent over the period, up from 32.1 percent a year earlier.

Revenues in the Americas rose 14 percent; while European markets recorded 12 percent growth, which was less than the growth of 16 percent in Asian markets outside Japan. The results helped Hermes outperform its rival LVMH, whose organic leather and fashion revenue increased 5 percent over the period.

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The company, which hired 900 people last year, said it will open two leather-goods stores in France to keep up with demand. It also said in the statement that it will “continue with its long-term strategy which includes stretching its distribution network and protecting supply sources”.

In total, the company plans to either renovate or open around 20 shops in 2014, such as a fifth “maison” store in Shanghai in September.

Hermes, which makes Birkin and Kelly leather handbags, saw its shares decline 0.6 percent to stand at 236 euros in afternoon trade in Paris, valuing it at 24.9 billion euros.

Analysts have attributed the company’s solid performance to fewer stores, and the “benefit of excess demand and waiting lists”.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com