Hermès Says Profitability Is Improving as Sales Beat Estimates

PARIS, France — Hermès International SCA's second-quarter sales beat analysts' estimates on additional factory capacity and the French maker of $10,000 bags said first-half profitability improved due to a currency hedging contract.

Sales rose 8.1 percent excluding currency shifts, Hermès said in a statement Thursday. Analysts expected 5.6 percent growth. The first-half operating margin widened about 1 percentage point, helped by hedging on foreign exchange rates, the company said.

Hermès is steadily increasing production of its signature leather goods, which have waiting lists that can run for more than a year. That’s helping the maker of Birkin handbags weather slowing luxury demand. China’s cooling economy and terror attacks in Europe have some analysts bracing for the industry’s second-weakest year since 2009.

Hermès has warned that 2016 will be difficult. If demand remains subdued in parts of Asia and the US, revenue growth could be below 8 percent this year, excluding currency swings, the company repeated. First-half growth was 7.2 percent on that basis.

Second-quarter revenue rose 6 percent to 1.25 billion euros ($1.4 billion). Analysts predicted 1.23 billion euros.

By Andrew Roberts; Editors: Matthew Boyle, Paul Jarvis & Thomas Mulier.