Hermes Opens Lower as 2021 Results Seen Underwhelming

By Joshua Kirby

Shares in Hermes International SCA sank in opening trade Friday despite the French fashion firm reaching a record operating margin in 2021, with analysts pointing to supply issues affecting performance in the year's final quarter.

At 0819 GMT, share were trading 6.7% lower at EUR1,171.

Revenue for the year surged to almost 9 billion euros ($10.23 billion), maintaining a 33% pace of organic growth versus 2019 in the second half of the year as in the first, Hermes said Friday. With the margin reaching a record 39.3%, the company's operating profit surged to EUR3.53 billion.

The result puts Hermes among the world's most profitable megabrands, brokerage Bernstein said following the print, noting that the company also has plenty of scope for price increases ahead.

However, the results didn't beat consensus expectations in the way seen recently at luxury-sector peers like French groups LVMH Moet Hennessy Louis Vuitton SE and Kering, or Switzerland's Compagnie Financiere Richemont SA, analysts at Citi said. In the year's fourth quarter, Hermes's core leather-goods category fell short of expectations with 11% growth over two years given supply constraints; this issue will need to be clarified by management, Citi warned.

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

(END) Dow Jones Newswires

February 18, 2022 03:42 ET (08:42 GMT)

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