Unlike many of its competitors, Hermes actually had a good
holiday season. Sales were up which gave the company a fourth quarter sales increase of 6.2%. But sales in Japan are faltering and the year ahead most likely won't be so profitable.
"We grew everywhere except Japan," chief executive officer Patrick Thomas told WWD. "But clearly, the growth rates are declining."
Hermes is slated to report profits on March 19 and warned it may miss its target of flat operating margins and net profits.
For 2009, Hermes said it is targeting flat sales, excluding the impact of currency, and a "slight decrease" in the operating margin.
Asked about recent trading, Thomas said, "We maintain the pace. There's some momentum.... We are pretty well equipped to hold on during the crisis. But there is no doubt we will be hit by the crisis."
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The Paris-based firm plans to continue investing in its retail network and open or renovate more than 20 stores. New locations slated for North America include Denver, Calgary, a men's only store on Madison Avenue in New York and a unit at the Wynn hotel in Las Vegas, already open. Hermes also plans six openings in China, as well as Istanbul and Nagoya in Japan.
A new men's store on Madison Avenue in New York? That may not be the smartest move. Wall Street has shed 250,000 high paying jobs and salary caps are gaining political momentum for top executives. Spending on luxury items is way, way down in New York, according to Mayor Bloomberg.
