Hermes gets Asian lift yet warns over drag from European crisis
HERMES’ first-quarter sales have grown strongly as Chinese buyers flock to stores in both Europe and Asia, yet the French luxury goods firm yesterday warned that the weak European economy could drag down growth in 2012.
The slowdown was not yet evident in the April figures, chief executive Patrick Thomas said, noting that the month was broadly in line with the beginning of the year, but the turmoil of Europe would continue to be a threat.
“It is going to be a very difficult year,” he said. “The beginning was easy … but the trend is not good.”
Hermes sales for the quarter grew 17.6 per cent, excluding currency fluctuations. Yet Hermes kept a cautious target of roughly 11 per cent growth for 2012 and noted that operating margins might be hit by commodity prices.
European sales for the quarter were strong, up some 27 per cent in organic terms, excluding France where growth was weaker due to supply problems. Thomas attributed European growth to brand loyalty and Asian tourism.
The Asia Pacific region also drove growth, with sales up 22 per cent, excluding Japan. Thomas said he saw no slowdown in demand for goods in China, a market which is closely tied to the health of the luxury goods industry.
Shares in rival luxury company LVMH, which owns a 22 per cent stake in Hermes, fell slightly in April when it intimated that demand in China was weakening for items like Louis Vuitton bags and Dior perfumes.