Hermès Tops Estimates on Strong Demand for Leather Goods

PARIS, France — Hermès International SCA, the French maker of $10,000 Birkin handbags, reported third-quarter sales that beat analysts' estimates on strong demand for leather goods in Asia and the Americas.

Revenue rose 11 percent to 990.6 million euros ($1.2 billion), Paris-based Hermès said today in a statement. Analysts predicted 983.5 million euros, according to the median of analysts’ estimates compiled by Bloomberg.

Supply constraints and high prices have helped cushion Hermès from softening demand in Asia that has dragged on growth at LVMH Moet Hennessy Louis Vuitton SA and Gucci-owner Kering SA. Hermès today retained its mid-term objective of 10 percent revenue growth at constant exchange rates, though said currency fluctuations may result in an operating margin this year that would be "slightly" lower than the record 32.4 percent achieved in 2013.

Excluding currency shifts, sales advanced 11 percent, compared with the 10 percent estimate.

Global sales of personal luxury goods will rise 2 percent this year, the weakest growth since sales fell five years ago, Bain & Co. estimated last month. Revenue will advance 5 percent excluding currency swings, the consultant said.

LVMH, which disclosed four years ago it built a stake in Hermès without the company's knowledge, has agreed to distribute the holding to its own investors on Dec. 17, seeking to end a feud between the luxury-goods makers. The payment will leave LVMH Chairman Bernard Arnault's family holding company with an 8.5 percent interest in Hermès.

By Andrew Roberts; editors: Celeste Perri, Thomas Mulier.