CaratHermès sells €269 million of watches and calls it stable
First-half watch revenue fell 4.2% as published and rose 0.2% at constant rates. The second quarter grew 4.4%. Jewellery and home together took €1.065 billion, up 5.4%, on a group margin of 41%.
§1Flat is a result.
Hermès reported a first half in which its watch division did almost exactly nothing, and that counts as a result. Watch revenue was €269 million, down 4.2% as published and up 0.2% at constant exchange rates, meaning the entire decline was currency. The second quarter was better: €134 million, up 3.0% published and 4.4% at constant rates, with the house crediting its established collections, Cape Cod among them. For a division that competes against Swiss houses still working through inventory, flat is the shape of a soft landing.
The jewellery side did the growing. Other Hermès sectors, the line that carries jewellery and home, took €1.065 billion in the half, up 0.8% published and 5.4% at constant rates, with the second quarter up 4.0% on the same basis. That segment is now roughly four times the size of watches at Hermès and is growing where watches are holding. It is the same split visible at Kering, where the jewellery houses grew 20% on a comparable basis while the group as a whole barely moved.
§2Jewellery does the growing.
The group figures give the divisional numbers their weight. Revenue was €8.2 billion for the half, up 6.1% at constant rates and 1.6% as published, with recurring operating income of €3.4 billion and a margin of 41.0%. Net profit was €2.2 billion. Very few businesses in any industry hold a forty-one percent operating margin through a luxury slowdown, and none of the groups Hermès is usually compared against did so this half.
That segment is now roughly four times the size of watches at Hermès and is growing where watches are holding.
§3Geography, not product.
Geography explains more than product does. The Americas grew 15.3% at constant rates and Japan 11.0%, while Europe excluding France added 8.8% and the Middle East fell 4.2%. American strength through a tariff round is the surprise in that table, and it lines up with US jewellery sales running roughly 9% ahead in the first half on stronger high-ticket demand. Axel Dumas, executive chairman, said the performance reflects the desirability of the group's sixteen métiers and expressed confidence in the second half.
Read the watch line as a control experiment. Hermès makes watches without the secondary-market dependency that governs Rolex, Patek and Audemars Piguet, sells them through its own doors, and produced a flat half in a market where flat is respectable. What that isolates is
the difference between a watch business and a watch investment market, because a house whose watches were never bought as an asset does not have to wait for resale prices to recover before it can sell the next one. The rest of the trade is still waiting.
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