Nov. 6 (Bloomberg) -- Hermes International SCA, the French maker of Birkin handbags, said third-quarter sales growth slowed to 4 percent after deteriorating economies in Japan and other main markets cut into luxury-goods demand.

Hermes fell as much as 6.3 percent, the most in three weeks, in Paris trading. Revenue rose to 410.5 million euros ($527 million), the Paris-based company said today, just below the 410.8 million-euro median estimate of six analysts surveyed by Bloomberg. Growth was a third of the prior quarter's 12 percent gain. The bag maker maintained its annual sales-growth goal

Luxury companies face their first sales drop in a decade next year, consulting firm Bain & Co. said last month, as weaker economies and financial-market turmoil hurt demand for higher- priced products from consumer electronics to autos. Purchases of goods from Bang & Olufsen A/S televisions to Harley-Davidson Inc. motorcycles are slumping as demand crumbles.

``During October, retail activity continued to grow at a more moderate pace,'' the bag maker said, adding that sales rose 6 percent last month. Annual sales will rise less than the 14 percent pace at constant exchange rates for the first nine months, Hermes said.

Sales rose 1.7 percent in Japan, the source of about a quarter of the total, and gained 9.4 percent elsewhere in Asia. Revenue climbed 8.3 percent in the Americas and added 2.8 percent in Europe, according to the statement.

Sole Increase

Hermes fell 4.19 euros, or 4.1 percent, to 97.20 euros at 10:25 a.m. local time. The stock has added 12 percent this year, the only increase in the 13-company Bloomberg European Fashion Index, which has dropped 47 percent. While takeover speculation has boosted the shares, an acquisition is unlikely, according to John Guy at MF Global in London and other analysts.

``We would argue that Hermes is more defensive now than ever before to any hostile bid and that it is simply not up for sale,'' Guy said in an Oct. 28 note. He advised investors to sell the stock, cutting his recommendation from ``neutral.''

The family that controls Hermes is ``passionately attached'' to the company, Chairman Jerome Guerrand, a descendant of founder Thierry Hermes, told investors in June.

Sales in the 175 billion-euro luxury industry will slide at least 3 percent next year excluding currency movements and may drop as much as 7 percent as demand shrinks in western Europe, according to a study by Bain consultant Claudia D'Arpizio. Confidence among U.S. luxury-goods buyers is at the lowest in at least four years, researcher Unity Marketing said last month.

`Relative Exclusivity'

``Hermes is not immune from the weakening economic environment, but brands ought to fare better than most given their relative exclusivity, high-end product positioning and pricing power,'' MF Global's Guy said.

Leather-goods sales climbed 14 percent in the quarter, leading growth, while revenue gained 9.7 percent for silk scarves and fell 15 percent for perfumes. Sales of women's wear designed by Jean-Paul Gaultier and other clothes rose 4.9 percent.

Hermes, which opened a Wall Street shop last year, plans to open or renovate seven stores next year that include a San Diego outlet in addition to Chinese and Indian properties. The company generated about 15 percent of 2007 sales in the Americas and aims to raise revenue by 10 percent a year in the ``mid to long term.'' Sales were 395 million euros in 2007's third quarter.

To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net.

Last Updated: November 6, 2008 04:28 EST