By Andrea Figueras
Hermes International is scheduled to report results for 2023 on Friday. Here is what you need to know:
SALES FORECAST: Analysts expect the French luxury-goods major to book revenue of 13.32 billion euros ($14.31 billion), according to a poll of 13 estimates compiled by Visible Alpha. In 2022, the company posted revenue of EUR11.6 billion.
OPERATING PROFIT: The company is expected to report operating profit of EUR5.52 billion, according to Visible Alpha consensus, an increase from EUR4.7 billion in the prior year.
NET PROFIT: Hermes should post a net profit of EUR4.03 billion, according to a poll of estimates compiled by Visible Alpha, up from EUR3.37 billion in 2022.
Shares in Hermes have risen 19% in the past twelve months. On Oct. 20, shares jumped after peer Brunello Cucinelli posted a positive third-quarter print and raised guidance for 2023, which seemed to bode well for Hermes since both companies are exposed to wealthier consumers, Bernstein analysts said in a research note.
WHAT TO WATCH
–After exceptional growth that followed the pandemic, the luxury industry is facing a slowdown in demand due to inflation and high interest rates that have squeezed consumer spending. However, Hermes has proven more resilient than some of its peers in times of uncertainty, Barclays analysts said. “We believe the brand is more likely to outperform the sector in 2024 and deliver stronger topline growth,” they said.
–The current economic environment is hitting spending among aspirational consumers, thus exposure to high-end clientele–among which demand has proved more resilient–could explain the exceptional results of some companies including Hermes and Richemont, UBS analysts said in a research note. Furthermore, the luxury sector is seeing a slower-than-expected recovery in China, one of the industry’s largest markets, due to domestic economic woes. However, higher-income groups are showing resilience in the country, which could also be behind the outperformance of the high-end positioned brands such as Hermes, UBS said.
Write to Andrea Figueras at [email protected]
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