Hermes International Revenue Growth Slows in 2Q

By Nick Kostov Features Dow Jones Newswires

French luxury brand Hermes International SCA (RMS.FR) Friday said its operating profitability at the end of June should be similar to the historical peak of last year despite weakening sales growth in the second quarter.

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The maker of the Birkin and Kelly bags reported an 8.9% rise in revenue to 1.36 billion euros ($1.57 billion) over the three months to end of June, compared with the same period a year earlier. Hermes didn't disclose profit for the period.

Stripping out the effects of exchange rate fluctuations, revenue rose 8.3% in the period. That is below the 11% growth of the first quarter this year, but an acceleration on the 7.4% growth in 2016.

"The operating profitability at the end of June should be close to the highest historical level achieved last year," Hermes said. "This performance can not be extrapolated over the full year, due in particular to the favourable impact of foreign exchange hedges in the first months of the year."

Sales growth at its leather goods division, which makes up half of the company's sales, slowed to 9.7% from the 15% rise reported in the first quarter on a constant currency basis. Sales from the ready-to-wear and fashion accessories business line rose 13% on the same basis, while revenue from the sale of silk and textiles advanced 2.9%.

"I don't see a change in the underlying trends during the second quarter," said Hermes Chief Executive Axel Dumas. "This growth was sane because it was achieved practically without raising prices."

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Hermes said it was keeping an "ambitious" medium-term goal for revenue growth at constant exchange rates despite growing economic, geopolitical and monetary uncertainties.

Write to Nick Kostov at nick.kostov@wsj.com

(END) Dow Jones Newswires

July 21, 2017 03:33 ET (07:33 GMT)