Production caps limit Hermes sales growth in Q4
French luxury group Hermes said sales grew by 11% in the fourth quarter of 2021, a touch below market expectations as self-imposed production caps meant the group could not keep up with demand for its handbags.
Sales at the leather goods and saddlery division, which includes its famed Birkin and Kelly handbags and accounts for almost half of total sales, fell by 5.4% over the period, with the company citing capacity constraints.
Hermes traditionally caps volume growth in its leather goods production at 7-8% annually, preferring to have long waiting lists for its prized handbags rather than accelerate production.
Hermes said overall sales rose to 2.38 billion euros ($2.71 billion) in the three months to December, with U.S. shoppers in particular driving growth. That compared with a consensus forecast for revenues of 2.53 billion euros and 12% growth at constant exchange rates cited by UBS.
Sales growth in the key holiday season at Hermes slowed down from the stellar pace seen in the previous quarters of the year, in contrast with the acceleration seen for most of the luxury sector.
That said, the group has weathered the coronavirus pandemic better than many rivals, and its 2021 sales grew by 42% from a year earlier and by 33% from their pre-crisis, 2019 levels.
Executive Chairman Axel Dumas told reporters Hermes had increased global prices by 3.5% on average this year, above the usual increase rate of 1.5%, to reflect a rise in production costs.
