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PARIS, France — Luxury handbag maker Hermès International SCA said third-quarter sales rose 15 percent as Chinese tourists taking advantage of the weak yen fueled demand in Japan.
Revenue climbed to 1.14 billion euros ($1.2 billion), Paris-based Hermès said Thursday in a statement. Analysts predicted 1.15 billion euros, according to the median of 13 estimates compiled by Bloomberg. Excluding currency swings, sales climbed 7.9 percent, in line with the 8 percent estimate.
By keeping the supply of $9,400 Birkin bags limited, Hermès is weathering slowing luxury demand better than lower-priced competitors such as Burberry Group Plc, which has forecast profit to decline a second year. Having more than 40 stores in Japan also helps as the yuan was higher against the yen during the quarter, attracting Chinese shoppers. Sales in Japan rose 19 percent.
Hermès reiterated its mid-term target of 8 percent annual revenue growth excluding currency swings and repeated that the operating margin will narrow from last year’s 31.5 percent because of foreign exchange moves. The forecast decline in profitability shows that Hermès didn’t raise prices enough in Japan to offset the weaker yen, according to Exane BNP Paribas.
By Andrew Roberts; editors: Matthew Boyle, Thomas Mulier, Phil Serafino.
