Hermes Announced Sales Growth In The First Quarter Of This Fiscal Year.

But there are two other big ones than France.

Group LVMH and Kering (Kai Yun) recently released strong performance data, Hermes's performance is slightly dull.

Above: comparison of organic sales growth (yellow) and industry forecast (red) in the first quarter of three luxury goods groups: Kai Yun, LVMH and Hermes.

The growth of Hermes sales has benefited from the outstanding performance of leather goods. Sales of this category increased by 15% over the same period last year, higher than analysts' previous forecast of 11% growth.

This growth is mainly based on the increase in the production of new handbags and the relatively low price of new handbags.

The company said it will adhere to the strategy of increasing production and increase the output of leather goods by 8% this year.

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Product is certainly a successful strategy in the downturn of luxury goods market.

In the first quarter of 2016, sales of LVMH fashion and leather goods department increased by only 4%, while sales of Hermes leather goods and harness Department increased by 15.4% compared with the same period last year. In the first quarter of this year, the LVMH leather Department was catching up with the whole market and achieved 15% organic growth.

Above: the growth in sales (blue) of Hermes leather and harness Department (red) and LVMH leather and fashion sector in each quarter of 2016~2017.

But once the luxury market starts to recover, the strategy of increasing production will bring huge risks. At this time, we should start limiting production and maintain the high-end positioning of the brand.

Hermes has room for maneuver in controlling output.

The company's early warning performance may not last for the first quarter of the year, mainly considering the downturn in the entire luxury market in the same period last year, compared with the first quarter of this year.

In the last 9 months, Hermes gave up the target of year-on-year sales growth of 8% (excluding exchange rate factors), and replaced the ambitious goal with a broad description of sales growth targets.

Until now, Hermes has handled properly in terms of balanced sales growth and high-end brand positioning. But if we continue to increase output, high pricing will be unreasonable and difficult to justify.

This Tuesday,

Group Chairman and chief executive officer Bernard Arnault's family group announced that it will acquire 25.9% stake in Christian Dior Dior group held by small shareholders in 12 billion euros.

According to the takeover offer, the Bernard Arnault family will pay 172 euro's cash for each Christian Dior share (through subsidiary Semyrhamis) plus 0.192 Hermes (Hermes) shares (Arnault family group is also the second largest shareholder of Hermes, with a shareholding ratio of 8.5%).

The price of Hermes shares hit a new high on Monday. The world clothing shoe and hat net editor said that this is the perfect time for Bernard Arnault family to cash in.

At present, Hermes has a forward price earnings ratio of 37 times far more than the average value of other luxury peers included in Bloomberg Intelligence (20 times).

Above: the first quarter of 2016, the first quarter of ~2017,

The comparison of the forward price earnings ratio (pale blue) and the average value (dark blue) of luxury group included in Bloomberg think tank

For more information, please pay attention to the world clothing shoe and hat net information report.