By Dominique Patton
PARIS, July 29 (Reuters) – French luxury group Hermes reported a slight acceleration in growth in the second quarter on Wednesday, as the impact from the Middle East conflict eased and tourism recovered in France.
Second-quarter sales of products including handbags, silk scarves and perfume rose by 6.7% in currency-adjusted terms to €4.1 billion ($4.67 billion), Hermes said, in line with expectations and compared with 6% growth in the first quarter.
The report came after results from industry peer LVMH disappointed investors looking for signs that the luxury sector is finally turning a corner.
Hermes, which carefully controls production and sales to maintain exclusivity, had been the most resilient luxury group in a years-long industry-wide slowdown.
Nonetheless, growth fell below high single-digit percentages in the first quarter after conflict in the Middle East dented shoppers’ appetite from Dubai to Paris.
The impact of the conflict weakened in the second quarter, the group said, while growth in France increased by 6% from a drop in the first quarter.
“In the second quarter, we are seeing improved momentum in our Paris stores,” said CEO Axel Dumas, adding that tourist traffic in the country improved in the second quarter.
LEATHER GOODS SEES GROWTH OF 10%
Hermes, which caters to the ultra-wealthy with handbags over $10,000, said its leather goods division, accounting for almost 50% of revenues, grew 10% in the quarter, slightly below a Visible Alpha consensus of 10.8%.
In Asia-Pacific excluding Japan, the biggest region by sales for Hermes, revenue grew at 2.5% in currency-adjusted terms, steady from the first three months of the year.
“I see the Chinese market stabilizing, but I do not yet see a fundamental rebound,” Dumas told reporters, adding that despite the “uncertain” situation, he was nevertheless happy with the result.
“We are holding up well in an environment that, due to macroeconomic factors, isn’t exactly the most dynamic right now,” he said.
Hermes shares have dropped 20% since the start of the year.
($1 = 0.8773 euros)
(Reporting by Dominique Patton; Editing by Jan Harvey and Louise Heavens)
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