Paris—While Hermès International SCA reported today that its third quarter leathergoods sales dropped 0.5%—one of its worst performances in years—the luxurygoods company still raised its full year sales forecast.
Total third quarter sales were up 12.9% to 896 million euros (about $1.21 billion) on a constant currency basis, driven by sales in Asia and the Americas. Analysts’ expectations were for a 13.4% increase.
Hermès’ silk and textiles posted 13% growth and ready-to-wear and fashion revenue rose 19% on constant currency basis. Sales from watches were up 5.3%.
Sales in Japan fell 20% on a reported basis (but up 6% on reported basis)
The company also noted that weaken U.S. dollar and yen against the euro represented a negative impact equivalent to 63 million euros, up from 53 million euros over the first half.
Despite the negative currency impact, Hermès raised its full year sales estimate to 11% (constant exchange rate), up from its previous estimate for 10%. Operating margin for the year is expected to be close to its record of 32.1% in 2012. At the half-year point, the operating margin was already at 33.1%.
“The performance is not as good as expected in leather goods and we would like to know if it is because of production constraints or delays in shipments to the shops,” said David da Maia, a luxurygoods analysts at Aurel BGC.