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Hermes Sales Beat Estimates on Growth in Watches, Perfumes

A pedestrian passes a Hermes International SCA store in London. Photographer: Simon Dawson/Bloomberg
A pedestrian passes a Hermes International SCA store in London. Photographer: Simon Dawson/Bloomberg

May 11 (Bloomberg) -- Hermes International SCA, the French maker of Birkin handbags and silk scarves, reported first-quarter sales that beat analysts’ estimates as wealthy consumers purchased more luxury watches and fragrances.

Revenue increased 26 percent to 637.1 million euros ($918 million), the Paris-based company said today, sending the shares to a six-month high. The average estimate of three analysts compiled by Bloomberg was 590.3 million euros. Excluding currency swings, sales climbed 21 percent.

“You can’t really ask for more,” Antoine Belge, an analyst at HSBC in Paris, said in a phone interview. He has a “neutral” recommendation on the shares.

Worldwide sales of luxury goods may rise 8 percent this year, matching 2010’s pace, as demand strengthens in the U.S. and Europe and emerging-market shoppers splurge on costly handbags and other items, Bain & Co. said this month. LVMH Moet Hennessy Louis Vuitton SA, which owns a 20.2 percent stake in Hermes, posted a 17 percent gain in first-quarter revenue.

Hermes rose as much as 8 percent in Paris trading, the steepest intraday gain since Dec. 1. The shares were up 12.15 euros, or 7.5 percent, to 173.85 euros as of 1:17 p.m., heading for the highest close since Oct. 26.

Hermes forecasts full-year consolidated revenue growth of 8 percent to 10 percent at constant exchange rates. This “may now seem conservative in view of the stellar start to the year,” Pierre Lamelin, an analyst at CA Cheuvreux, wrote in a research report. He rates Hermes shares “underperform.”

Uncertain Outlook

The outlook for 2011 “is clouded by geopolitical and economic uncertainties, and more specifically by trends in the Japanese market,” Hermes said in the statement. “As a result, it is difficult to make any projections.”

Excluding currency swings, revenue jumped 27 percent in the Asia-Pacific region outside Japan, where sales rose 0.3 percent. Favorable conditions in Japan at the start of the year reversed after the March 11 earthquake, the luxury-goods maker said. Hermes gets 16 percent of sales from the country.

Revenue increased 20 percent in Europe and 33 percent in the Americas at constant exchange rates, Hermes said.

Excluding currency shifts, sales of leather goods increased 17 percent in the quarter, while revenue from silk ties and scarves gained 26 percent. Apparel sales and fashion accessories climbed 21 percent on the same basis.

Watch revenue rose 34 percent at constant exchange. Hermes’s full-year sales growth from timepieces may be reduced by the situation in Japan, the head of the company’s watch unit said in a March interview.

Perfume sales advanced 33 percent on the same basis, while tableware sales increased 10 percent.

To contact the reporter on this story: Andrew Roberts in Paris at

To contact the editor responsible for this story: Celeste Perri at

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