Leather lifts Hermes profits

France

Published: 06 September, 2010

Hermes, the Paris luxury-goods producer, reported on August 31 a 55% surge in first-half net profit, buoyed by strong sales in Asia. Leathergoods and saddlery sales were also strong, growing 23%, led by small leather accessories and leather bags. Perfumes, fashion accessories and watches also recorded double-digit sales growth.

Profit rose to €194.6 million euros ($246.3 million) from €125.4 million in the year-earlier period. Total sales increased 23% to €1.07 billion. At constant exchange rates, sales rose 20%.

Hermes sells various luxury products, including leather goods, silk and textiles, perfumes, clocks, shoes, clothing and accessories.

Shares of Hermes dropped 2.7% on Euronext in Paris. They have surged 35% over the past three months.

For the full year, Hermes estimates its operating-profit margin should improve from 2009 by at least 1%. Operating margin in the first half rose to 28.3% from 22.8% in the year-ago period.

In Asia excluding Japan, sales soared 45%, with Hermes opening two new branches in China during the second quarter. Sales in Japan disappointed, edging down 2%.

In Europe, sales rose 17% in the first half, ‘driven by excellent retail activity across all countries in the region,’ Hermes said.

In the Americas, sales increased 26%, extending the rebound that began in the fourth quarter of last year. The first Hermes store dedicated to men on Madison Avenue in New York opened at the beginning of the year.

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