Hermes Hit New Margin High in 1st Half, But 2Q Sales Slowed Amid China Lockdowns

By Joshua Kirby

Hermes International SCA on Friday maintained its medium-term growth goal as first-half earnings soared on record profitability and despite headwinds from lockdowns in China.

The luxury-fashion company, known for its exclusive handbags, made recurring operating income of 2.3 billion euros ($2.35 billion) in the first half of the year, up from EUR1.72 billion in the same period last year, and net profit of EUR1.64 billion. The recurring operating margin reached a new high of 42%, Hermes said.

Revenue in the half-year came in at EUR5.48 billion, decelerating in the second quarter to 20% growth at constant currency from 27% the previous quarter. In China, revenue was dragged by sanitary restrictions and store closures in April and May, but recovered strongly in June, Hermes said.

The company meanwhile booked its strongest growth in the U.S. where momentum continued, and in Europe, especially France, thanks to continued demand from local clients and a return of tourism.

The company set no targets for the full year, but said it remains confident of meeting its "ambitious" goal for constant-currency revenue growth over the medium term. "For 2022, the impacts of the health context are still difficult to assess," Hermes said.

Write to Joshua Kirby at [e-mail]; @joshualeokirby

(END) Dow Jones Newswires

July 29, 2022 02:34 ET (06:34 GMT)

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