French handbag maker Hermes lowers sales outlook on slowing economies

French handbag maker Hermes cut its sales outlook for a second year, predicting growth at less than half the level of the start of this decade, as the luxury-goods sector cools.

Revenue might miss its medium-term goal of 8% growth at constant exchange rates in 2016 due to global economic and political risks, the Paris-based maker of €9,000 briefcases and €6,000 messenger bags said yesterday.

Last year, Hermes lowered the goal from a previous target of 10%. Growth exceeded 18% in 2010 and 2011.

The outlook shows how China’s cooling economy, tumbling stock markets and lower oil prices are weighing on even the most exclusive brands.

It adds to concern about slowing luxury-goods sales, which MainFirst Bank estimates will expand about 2% in 2016.

“The high-end is not immune,” said Luca Solca, an analyst at Exane BNP Paribas.

Recent earnings reports from luxury-goods makers have been glum, with Richemont’s Christmas season sales dropping for the first time in seven years and Swatch Group’s 2015 profit missing estimates.

Revenue climbed 7.2% at constant exchange rates in the fourth quarter of 2015, Hermes said.

That was the slowest pace in six years as November’s Paris terrorist attacks led to a drop in tourist spending in the company’s home market.



This season textiles trend large, full of colour and exotic pattern, and applied in new ways to make a personal design statement from the living room to the bedroom, writes Carol O’CallaghanTextile trends that can help you make a personal design statement

More From The Irish Examiner