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 Hermes, known for its colorful silk scarves and its Kelly and Birkin
leather handbags, said on Wednesday that growth in its domestic
market slowed to 1 percent in the last three months of 2015, down
from 7.9 percent and 9.7 percent in the previous quarters.
"Tourist flows have not yet returned to normal," Hermes Chief
Executive Axel Dumas told Reuters, referring to the Paris attacks.
Hermes makes 14 percent of its turnover in France.
Hermes predicted that 2016 sales growth could be below its
medium-term target of 8 percent, citing global economic and
geopolitical uncertainty.
Shares in the company fell by more than 4 percent in early trading
but were up 1 percent by midday, helped by a rising French stock
market.
"We would not read too much into Hermes's guidance in earnest: it
has a history of over-prudence and it is very early in the year,"
said JP Morgan Cazenove analyst Melanie Flouquet, who kept her 2016
estimates unchanged, including sales growth of 7.5 percent.
Hermes posted an 8.1 percent rise in full-year sales at constant
exchange rates, one of the highest growth levels in the sector but a
clear slowdown from 2014.
Sales reached 4.84 billion euros ($5.46 billion) last year, broadly
in line with forecasts, with growth slowing from the previous year's
11.1 percent.
Fourth-quarter revenue was up by 7.2 percent, against 9 percent
growth in the previous three months.
One bright spot in 2015 was mainland China, Dumas said, where sales
rose by close to 10 percent, partly boosted by the opening of new
stores. Trading in Hong Kong and Macao, however, was weaker than
expected.
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Leather goods revenue rose 14.3 percent in the last three months of
the year, while fashion and ready-to-wear grew 3.7 percent, Hermes
said.
The fashion and leather division of the world's biggest luxury
group, LVMH <LVMH.PA>, last week beat expectations with a 3 percent
rise in like-for-like quarterly revenue. Burberry's <BRBY.L>
like-for-like sales remained flat, however, and Richemont's <CFR.VX>
revenue dropped by 4 percent, hit by weak demand in Hong Kong.
Hermes said that its silk and textiles sales fell 7.2 percent in the
fourth quarter, hit by the year-end events in France while suffering
from slowing sales in Greater China, though business continued to
develop in other regions.
The company, which publishes full-year results in March, added that
it expects its 2015 operating margin to be close to the 31.5 percent
achieved in 2014.
(Editing by David Goodman)
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