Nov 12, 2015
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Hermes' Q3 sales growth slows less than expected

Nov 12, 2015

French luxury group Hermes' sales beat expectations in the third quarter, despite a slowdown in the rate of growth, helped by demand for leather goods and ready-to-wear fashion.

Hermes stuck to its target of increasing annual sales by 8 percent at constant exchange rates on Thursday, after reporting revenue rose 7.9 percent on a like-for-like basis in the third quarter, down from 9.7 percent in the second and 8.0 percent in the first.

The Cape Cod watch from Hermès - Hermès

Europe delivered 14.8 percent like-for-like growth in the third quarter, outpaced only by Japan with 16.6 percent. Asia-Pacific growth, excluding Japan, dwindled to 1.5 percent amid "a difficult context in Hong Kong, Macao and to a lesser extent in continental China".

LVMH, the world's biggest luxury group, said a month ago that the stock market collapse in China over the summer had affected sales, particularly at its flagship Louis Vuitton brand.

Cosmetics giant L'Oreal said last month that demand for its luxury products had suffered a slowdown in Hong Kong and at airports, while Cartier-owner Richemont warned last week that it expected a challenging second half following weak demand for luxury watches in Hong Kong and Macau in the first six months to September.

But British luxury brand Burberry said on Thursday its comparable store sales since the start of its third quarter had improved relative to the second, when they were dented by a slowdown in China and Hong Kong.

Hermes' leather goods division, its biggest, achieved 8.6 percent quarterly like-for-like growth, compared with 11.9 percent for ready-to-wear fashion and accessories, the company said in a statement. The maker of silk scarves and Birkin bags also stuck to its 2015 target for an operating margin below the 31.5 percent achieved last year.

Analysts had expected 7 percent like-for-like growth.

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