Hermes-China a win-win gambit for the French

Hermes-China a win-win gambit for the French

September 17, 2019 0 By User
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China is now the backbone— or part of its backbone— for the French luxury goods maker Hermes.

A “strong level of activity” in its China business bolstered its overall first-half performance.

Guess it is a winner in the ongoing US-China trade war tensions and Hong Kong unrest.

But what does the French have to do with the trade war and Hong Kong?

France is taking advantage of the trade conflict and French goods are also replacing American goods in China.

Hermes, best known for its handbags and scarves, posted a seven percent hike in net profit to 754 million euros ($830 million), compared with analyst forecasts for 745-775 million euros.

Handbag business is its core business accounting for 50 percent of group sales. Revenues for handbag business is up 16 percent to 1.6 billion euros for the first half.

The operating profit margin was 34.8 percent, just below the record 34.9 percent achieved in the first quarter of 2018, it said.

In July that its first-half sales jumped 15 percent from a year earlier to 3.28 billion euros.

READ: Grace Kelly and Hermes’ sac a depeches!

NOT ONLY CHINA

As incredible as it sounds, Asia continues to be Hermes’ largest market or 52 percent of sales.

Its sales in the US is 17 percent for the Americas and 17 percent for Europe (excluding France). France alone chalked up 12 percent.

About Hong Kong, the ongoing protests mean business is down. But mainland China comes to the rescue.

HOT CAKES

Western products of almost any type and brands or price has great value in China. They sell like hotcakes.

With the China-US tariffs fight (both countries imposing tariffs on each other), sales of other Western goods are picking up.

Hermes said massive pro-democracy protests and unrest in Hong Kong had hit its six stores which are situated right in the middle of the human storm in town and at the airport.

“Nonetheless, the impact in Hong Kong will be offset by the strong level of activity in mainland China where the business remained the same over the first two quarters,” Hermes finance director Eric du Halgouet told a conference call.

Du Halgouet also said the company was not “directly impacted” by US-China trade tensions.

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