November 8, 2012 / 6:26 AM / 5 years ago

UPDATE 2-Hermes sees no slowdown anywhere

* Q3 sales 849 million euros

* Says 2012 sales growth could top 13 percent

* Shares up 2.9 percent (Adds CEO comment, analyst, detail, rivals)

By Astrid Wendlandt

PARIS, Nov 8 (Reuters) - French luxury goods group Hermes has seen no sign of weakness in demand, even in Asia, unlike peers who have highlighted flagging demand.

Chief executive Patrick Thomas said trading remained strong in South Korea, Taiwan and also in China where other luxury brands such as Burberry, LVMH’s Louis Vuitton and PPR’s Gucci have posted slowing sales growth.

“Globally, we do not see any slowdown anywhere ... including in Asia,” Thomas told Reuters in an interview on Thursday.

Hermes, known for silk scarves and Birkin and Kelly handbags, said third-quarter sales rose 15.7 percent at constant currencies to 849 million euros ($1.1 billion), up from 13.4 percent in the second quarter.

October was in line with the third quarter, Thomas said.

Revenue from China was up 27 percent in the three-month period, with the country now accounting for about 25 percent of group turnover against 19 percent last year, he said.

In contrast, Louis Vuitton’s third-quarter sales in China were estimated to be around 5 percent higher, with some analysts saying it has been suffering from its own success after flooding the market with its products. As a result, certain consumers have started to feel jaded with the brand.

Louis Vuitton, the world’s biggest luxury brand in terms of sales with revenue of more than 7 billion euros, is also more affordable than Hermes.

Louis Vuitton sells leather bags starting at around 760 euros, while Hermes starts at 1,380 euros. Hermes had revenue of 2.8 billion euros last year.

Louis Vuitton makes up about 75 percent of sales generated by the fashion and leather division of parent LVMH, the No.1 luxury goods group whose brands include Roman jeweller Bulgari and fashion brands Celine, Fendi and Kenzo.

Shares in Hermes, the maker of 12,000-euro handbags and 400-euro scarves, were up 2.9 percent at 1305 GMT.


Last month, LVMH’s fashion and leather goods unit said sales growth slowed to 5 percent in the third quarter from 8 percent in the second quarter and January-March’s 12 percent rise.

Meanwhile, Gucci fared a little better, with sales growth down to 7 percent in the third quarter, against 10 percent in the second and 11.6 percent in the first.

Thomas said Hermes’s strategy of limited growth was paying off as it had helped the brand retain an exclusive image.

He said Hermes could grow about 10 percent annually in terms of volumes of goods produced because it could only hire and train 200-250 artisans a year.

Hermes said 2012 sales growth at constant exchange rates could exceed 13 percent, up from a previous forecast of 12 percent that had been raised from 10 percent in August.

UBS analysts said in a note Hermes was “defying the gravity that had impacted a number of the other European luxury players” and raised its full-year sales growth estimate to 13.9 percent from 12.4 percent.

Hermes said its full-year operating margin would fall from last year’s record high of 31.2 percent and be above the 27.8 percent recorded for 2010.

Thomas said travel retail sales were also strong and perfume revenue remained buoyant - up 14 percent at constant currencies.

French cosmetics maker L‘Oreal had said this week it suffered a slowdown, mainly in Asia and Southern Europe. ($1 = 0.7840 euro) ($1 = 0.7840 euros) (Additional reporting by Pascale Denis; Editing by Dan Lalor and James Regan)

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