INTERVIE apad 2.1 W-UPDATE 1-Hermes plans 3-4 new stores per year in China
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INTERVIEW-UPDATE 1-Hermes plans 3-4 new stores per year in ChinaPublished: 09 Sep 2008 01:40:48 PST
China sales have doubled annually in last 3 years
China could become top 5 market for Hermes in 4-5 years
* China business so far not affected by economic slowdown
SHANGHAI, Sept 9 - Paris-based luxury group Hermes<HRMS.PA> plans to open three to four stores in China each yearover the next three years, tapping the country's growing ranksof affluent consumers, a senior executive said on Tuesday.
The company, which already operates 12 stores in China, hasdoubled its sales in the country every year for the last threeyears although that pace will be hard to maintain in the yearsahead as the revenue base has widened, Hermes Executive VicePresident Patrick Albaladejo said in an interview.
He declined to give a figure for the company's annual salesin China, but said it was less than $50 million.
The company posted 1.63 billion euros ($2.30 billion) inglobal sales last year.
"We expect to see very, very solid growth in our existingstores in China," Patrick said. "We're just at the beginning ofthe potential we'd like to tap."
China had 415,000 millionaires in U.S. dollar terms at theend of 2007, ranking fifth worldwide, according to a report byMerrill Lynch and consultancy Capgemini. The number has beenrising as the economy surged at double-digit rates over the lastfive years.
The market has been targeted by luxury goods makersincluding Gucci, LVMH <LVMH.PA> and Italy's Tod's <TOD.MI>.
China has the potential to become one of Hermes' top fiveglobal markets in four to five years, Albaladejo said.
He added that Hermes' business in China could be affected ifthe country's economic mood is harmed by the global economicslowdown, although he added that his company had seen no impactfrom any signs of a downturn so far.
Known for its upmarket leather handbags and themed scarves,Hermes has said it will aim for 10 percent organic sales growthworldwide in 2008 and has an operating margin target of 25.5percent for the year. "The bulk of our customers is a select group of very richpeople whose lifestyle is not influenced by the economicslowdown," Albaladejo said.
In Japan, however, many Hermes customers are middle-classconsumers and its business has suffered with the soft economy,he said.
Hermes, also known for its "H"-embossed belts and perfumessuch as Bel-Ami and Caleche, sells watches and perfumes throughdepartment stores in China.
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