Hermes International (FR:RMS) shares rose nearly 5% on Friday after the French luxury goods company reported solid sales for the fourth quarter of 2023, defying the slowdown experienced by many of its peers. The company’s revenue increased 18% (at constant exchange rates) to €3.36 billion in Q4 2023, despite tough comparisons with the robust performance in America and Asia in the prior year’s comparable quarter.
More on Hermes’ Impressive Results
Hermes, the maker of Birkin bags, witnessed double-digit revenue growth (at constant currency) across all regions in the fourth quarter. In particular, the company’s business in Asia generated revenue of €1.72 billion and was the largest contributor to the overall revenue.
Overall, Hermes generated €13.43 billion in revenue in 2023, reflecting a 21% growth at constant exchange rates. Net profit increased 28% to €4.31 billion, driven by higher revenue and a rise in operating margin to 42.1% from 40.5% in 2022. Further, the company’s operating cash flow increased 25% to €5.12 billion.
So far, the earnings season for the luxury industry has been mixed due to macro pressures and a slower-than-anticipated recovery in China, a key market. On Thursday, luxury goods player Kering (FR:KER) reported lower sales for Q4 2023 but managed to beat expectations.
Meanwhile, Hermes plans to propose a dividend of €15 per share for 2023, reflecting a 15% increase from €13 per share in 2022. The company also announced an “exceptional” dividend of €10 per share.
Is Hermes a Buy or Sell?
With three Buys and five Holds, RMS stock scores a Moderate Buy consensus rating. The Hermes International share price target of €2,067.75 implies a possible downside of 5.2%. Shares have advanced nearly 30% in the past year.
