Hermes Predicts 12% Rise in 2012 Sales

Paris—Although noting that economic and foreign-exchange fluctuations make it difficult to forecast full-year figures, Hèrmes International SCA lifted Friday its sales guidance and gave a narrow range for its operating margin.

For the first six months of the year, Hèrmes posted a 15% increase in its net profit to 335.1 million euros.

Operating profit increased 22% to 510.9 million euros (about $640 million), with an operating margin of 32%, unchanged from the previous year’s first half.

The company previously said that first half sales rose to 1.591 billion  euros from 1.305 billion euros in the prior year’s period, for a gain of 22%.

The company ventured guidance of around a 12% rise in annual growth in sales in view of the first half performance, measured at constant exchange rates. The operating margin could come in between the 28% level of 2010 and the historic high of 31.2% reached in 2011, the company said.

Hèrmes had previously said that it expects sales this year to increase 10%, which would represent a slowdown from the 18% growth recorded in 2011.

In recent years, the luxurygoods’ rising tide has been supported by consumer spending in emerging markets, notably  China, allowing the industry to remain almost immune to the crisis. Yet signs of an economic slowdown in China have led analysts to question the sustainability of the booming business in the high end.

Hèrmes said that in the second half it would continue its strategy based on the development of its distribution network, strengthening its production capacity and securing its supplies.

Growth was driven by big-spending Asian markets like China, Singapore and Hong Kong, which defied slowdown fears with 25% sales growth in the first half. All product lines, from leathergoods to jewelery and watches, grew at double-digit rates.

 

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