Hermes saddles up for luxury rebound with new leather workshops

FILE PHOTO: The front of the Hermes store is seen along Madison Avenue in New York, U.S., March 20, 2017. REUTERS/Shannon Stapleton/File Photo

PARIS (Reuters) - Hermes HRMS.PA, the French label known for its $10,000-plus Birkin and Kelly bags, plans to add two leather goods workshops in France by 2020 to meet a recovery in demand for luxury goods.

Like LVMH LVMH.PA and Kering PRTP.PA, Hermes has reported a sales bounce this year as Chinese shoppers in particular buy more high-end products.

Hermes said on Monday it would be hire 500 people in total for the two new sites and is already on course to add some 250 in France, where it employs just over 8,000 people, this year.

More than 3,000 work at its 15 existing French workshops specialized in making saddles, luggage and other leather goods.

Hermes is also known for its printed silk scarves and neckties and makes perfume and watches, but its leather division - home to coveted handbags that are often only available through a waiting list - is its biggest revenue driver.

Sales in that unit were up 12.2 percent in the first half of the year at constant exchange rates, while revenue across the group grew 9.7 percent.

The broader luxury goods industry is enjoying a comeback after several years as Chinese demand improves following a slowdown, and younger shoppers worldwide show a growing taste for high-end goods, boosting online sales.

Many firms are wary about 2018, however, as comparatives become less favorable following a buoyant year for growth. A strengthening euro is also making a dent in earnings when converted into the currency, and could put off some buyers.

Hermes is due to report third quarter sales on Nov. 8.

Reporting by Sarah White; editing by Alexander Smith