PARIS – Aided by an enlarged retail network, Hermès International said net profits climbed 8.7 percent last year to 268.4 million euros, or $351.3 million, up from 247 million euros, or $323.3 million, a year ago.
The results were boosted by a net capital gain of 14.1 million euros, or $18.5 million, from the disposal of the company’s stake in the camera firm Leica, but reflect a slowdown in Japan in the second half and the discontinuation of Hermès’ canvas bag lines, which clipped annual sales growth by 2.6 percent.
Patrick Thomas, chief executive officer of Hermès, called the numbers “satisfactory. I remind you that Hermès has a strategy of value growth, not volume.”
He said new stores and improved production capacity would boost the company’s fortunes in 2007, with investments roughly on par with 2006, when Hermès spent 134 million euros or $175.4 million on stores and factories, including a stake in Vaucher, a watch maker.
“We hope these new stores we are opening will help us make up for some of the shortfall in Japan,” Thomas told WWD. “Good old Europe is performing extremely well, as is China and the rest of Asia, excluding Japan.”
Hermès said it plans to open or renovate 24 branches this year. Key openings include a new unit in Osaka in April, a Wall Street boutique in New York in June, and the expansion of its Paris flagship on the Faubourg Saint Honore (with an accent LA to NY on the e) to 20,000 square feet from 16,000 square feet, set for a September christening.
For complete coverage, see tomorrow’s issue of WWD.