Unexpected revenue high of $1.31 billion have been registered in the first quarter for Parisian fashion house Hermès, and it all down to Japan’s love for luxury goods The brand, known for their Birkin bag and silk scarves said “Sales on a constant-currency basis surged 22 percent in Japan”. Prices were raised and shoppers splurged in advance of a sales tax increase, which came into effect on April 1st 2014.
Due to its popularity, the company are adding more production facilities in France and plan to open more stores within a year. It would seem that the marketplace for luxury goods is certainly not slowing down. Similarly, the European continent posted 7.9 percent rise in sales even in this apparent difficult climate “Hermès will continue its long-term strategy,” the luxury-goods producer said. “Above all, it is our company’s unwavering determination to continually reinvent itself in order to push the limits of excellence.” Even with the exceptionally high first quarter, the stock has fallen 2.9 percent this year, valuing the saddle-maker part-owned by rival Moet Hennessy Louis Vuitton at about 27 billion euros. While major luxury rivals like Louis Vuitton and Gucci have experienced slowing growth in the all-important Chinese market, Hermès’ sales in China continued to grow by double-digit percentage points.
Leather goods products, Hermes’ main revenue and profit contributor, generated sales growth of 15.5 percent on a like-for-like basis, while ready-to-wear and fashionaccessories sales rose 19.1 percent. Although things to look particularly promising for Hermes there was a significant reason for the increase in sales in Japan as government raised the nationwide sales tax to 8 percent from 5 percent on April 1 so the country went on what would seem to be a national spending spree. The 11.0 percent annual increase inretail sales matched the median estimate and marked the fastest gain since the last time the government raised the sales tax in 1997, as consumers stocked up on electronics, toiletries and clothes to avoid paying higher prices.