There is no let-down in the growth of Hermès International, in spite of the difficult economic conditions in many parts of the world. In an interview with a German weekly, Der Spiegel, Patrick Thomas, Hermès' chief executive, said that the group probably reached sales of €3.4 billion for 2012, representing an increase of almost 20 percent, mostly driven by the strong demand for the brand's products in China.
He also added that he expects double-digit growth for the five years to come.Greater China, including Hong Kong and Taiwan, is already the biggest market for the French company, and according to Thomas, the situation is going to remain the same in that respect for at least the next 50 years.Hermès already raised its 2012 sales outlook in November, saying that growth at constant exchange rates could exceed 13 percent, compared with a previous forecast of 12 percent.
The forecast for the operating profit was between that of 2010 and its highest value ever, in 2011, namely between 27.8 percent and 31.2 percent.
Thomas took the opportunity of the interview to reiterate that Hermès will not be acquired by LVMH, in what he defined as a “cultural war,” rather than a “financial war,” between the two French luxury companies.
The LVMH group unexpectedly took a 17 percent stake in Hermès' capital in October 2010, which then rose to 21.4 percent despite an outcry from most of the Hermès family shareholders. At the end of May 2012, LVMH's stake had risen to 22.28 percent.
These transactions have been the subject of complaints back and forth between the two groups. LVMH said that its acquisitions were made through the use of derivatives. Hermès filed a complaint against LVMH in July. In return, the latter filed a complaint of blackmail, false accusations and unlawful competition.
Meanwhile, Hermès announced yesterday its acquisition of Tannerie d'Annonay, one of France's major manufacturers of chrome-tanned box calf leather. The company, which has been a major supplier of Hermès for a long time, employs 80 people at its tannery near Saint-Etienne and generates 70 percent of its sales outside France.
This new vertical integration move, designed to secure Hermès' supply chain in view of the growing demand for its products, takes up to about 30 the number of tanneries controlled by the group.
They are mostly located in France, with the exception of two manufacturers of exotic leather in Italy, Singapore and Louisiana. In 2011, Hermès' leather activities generated an external turnover of €63 million.