Executive Summary

• In 2Q16, Hermès reported very strong year-over-year sales growth of 6.0%, and 8.1% in constant currency, beating analysts’ expectations of 5.6% growth in constant currency. The result also marked a sequential quarterly acceleration from 6.2% constant currency revenue growth in 1Q16.
• Revenues were driven by momentum in all geographic regions, with robust sales even in France, despite lower tourist flows in the country. Outperformance in the leather goods and saddlery division and perfumes offset softness in other divisions.
• The luxury goods sector has been experiencing numerous severe headwinds, including demand slowdown in China, low oil prices, stock market and currency volatility, and fallouts from terrorist attacks. Given the challenging demand outlook and weakness at other luxury goods companies, Hermès’ performance is nothing short of impressive.
• The company’s luxury goods peers have reported soft revenue and profitability trends in 1Q16/1H16 (please see the performance table at the end of this report).