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Hermes posts 20pc surge in income

International Business
Sat, 29 Aug 2015

Paris: French luxury goods maker Hermes posted a 20 per cent rise in first-half operating income in line with expectations, helped by strong tourist demand in Japan, the US and Europe.

The brand known for its silk scarves and Birkin bags costing several thousand euros reiterated yesterday that its operating margin for the full year would be lower than in 2014 due to
currency fluctuations.

Hermes’ first-half operating margin of 32.5pc was close to the level of 32.6pc reached a year earlier. 

The margin was 31.5pc for 2014, down from 32.4pc
in 2013.

As expected, Hermes kept its medium-term goal of increasing annual sales at constant exchange rates by 8pc.

Half-year results from other luxury companies such as LVMH and Gucci owner Kering published last month have been stronger than expected. 

Their profits were driven in part by Asian shoppers in big European cities, as well as in Japan and Korea, who helped make up for lower sales from luxury hotspot
Hong Kong.

“We remain convinced that Hermes is the most defensive name in the luxury space: a long waiting list and a deliberate effort to ‘starve demand’ and maintain a ‘rarity effect’ make it so that Hermes growth and margin performance is more stable than peers,” Exane BNP Paribas analyst Luca
Solca said.

Hermes shares are up 9.2pc so far this year after gaining nearly 12pc in 2014. 

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