Hermès reports record annual profit for 2016

Luxury retailer Hermès (EPA:RMS) reported record annual profits for 2016 on Wednesday, noting a 13 percent rise in sales.

The French luxury label, who are the creators of the famous Birkin bag, saw 2016 profits ultimately rise to to €1.1 billion (£952 million). Hermès attributed the strong performance specifically to a 14 percent growth in revenue from its leather goods products, which ultimately make up over half of the company’s revenue.

Chief Executive Axel Dumas said it had been “a strong year for Hermes”, adding that it was “keeping its galloping moment.”

Nevertheless, Dumas remained cautious about developments in the new year and general uncertainty in the luxury market.

“2016 was an exceptional year because the stars were aligned for us: currency, growth and the collections did well. We maintain caution for this year.”

The best-selling leather ‘Birkin’ bag, which counts various celebrities such as Victoria Beckham and Kim Kardashian as fans, currently retails from £8,000 and upwards, depending upon materials and size. The French brand is also famous for its luxury silk scarves, which retail for an average of £295, depending on specific prints.

Alongside this, the company noted a turnaround for sales of its Silk and textile products, which had previously seen an adverse effect from terror attacks and a slowdown in its China markets. In addition, sales of Hermès perfumes were boosted by 9 percent growth, following the launch of various new fragrances. Nevertheless, watch sales slowed by 3 percent, as luxury watch sales continue to face challenging market conditions.

The brand issued a statement on the strong posting, noting:

“In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious target of growth rate for revenue at constant exchange rates,” it added.

In its February fourth quarter results, Hermès had anticipated a stronger-than-expected finish to 2016, with the company benefitting from currency movements as well as a pick-up in sales for its leather goods.

Shares in Hermès remain relatively steady as of currently, up by 0.04 percent as of 13.55PM (GMT).