Sales Slow for Hermès, But its Business Model Still More Resilient Than Peers

French luxury goods group Hermès said sales growth slowed in the first three months of the year after attacks in Brussels and Paris put off some tourists and an economic slowdown in China weighed on demand. The Paris-based luxury brand, known for its pricey Birkin and Kelly bags, reported a 6.2 percent rise in revenue at constant exchange rates to 1.19 billion euros ($1.35 billion) compared with 7.2 percent growth in the last quarter of 2015 and 8.1 percent overall for 2015. Hermès reiterated on Thursday that 2016 sales growth could be below its medium-term target of 8 percent, citing global economic, geopolitical and monetary uncertainties.

Photo: bridesmaid dresses cheap

The first quarter increase, which was driven by higher sales at its leather goods division, was slightly above analyst estimates and outpaced rivals in the industry, however.

Luxury goods industry leader LVMH said this month that it registered no sales growth at its fashion and leather goods division in the first quarter. Comparable growth at Kering's luxury business reached 2.6 percent.

Hermès said it achieved a 15.4 percent rise in quarterly leather goods and saddlery revenue, accounting for half of total group sales, "driven by sustained demand and the increase in production capacities at the two new sites" in France. Ready-to-wear and accessories sales slipped 1.9 percent due to a slowdown in Asia, the United States and France, while the Islamist militant attacks in Europe and slowing sales in Greater China and the U.S. dragged silk and textiles revenue down 9.2 percent.

Despite such a slowdown, analysts are optimistic. "In the current environment, it's always better to under-promise and over-deliver," RBC Capital Markets analysts wrote. He also added that "Hermès’ business model remains more resilient than its peers.”

See Also:long bridesmaid dresses