Hermès says second quarter sales rise 16 percent

PARIS, France - French luxury group Hermès posted a 16 percent rise in second-quarter sales at constant exchange rates on Thursday and forecast full-year revenue could slightly exceed its mid-term growth target of 10 percent.

Sales reached 910.4 million euros ($1.19 billion) in the quarter, driven by demand for ready-to-wear and fashion accessories.

Hermès added that its full-year current operating margin could be close to the historical high achieved in 2012 and that its recurring operating income was expected to increase slightly faster than revenue.

The maker of 500-euro printed silk scarves and 12,000-euro Birkin leather bags said demand remained strong in Europe in spite of the tough economic environment with sales up 15.3 percent at constant exchange rates in the period.

Trading remained strong in North America and Asia, and Japan "confirmed the turnaround observed in the first quarter".

It said the watches business continued to suffer from the general downturn but noted its performance came against a high comparative basis last year.

Revenue from that activity was up 3 percent in the quarter at constant exchange rates, reversing a 5.3 percent decline in the first quarter.

Hermès, mainly known for its leather bags which can take years to obtain depending on the colour and model, also improved growth at its leather goods division, which reached 10 percent, up from 7.3 percent in the first quarter.

It said sales continued to remain constrained by its production capacity but expanded two factories in the Isere and Charente-Maritime regions and planned to create two facilities in the Franche-Comte region.

Paris-listed Hermès, which started as a saddle and harness maker in 1837, is Europe's third-largest luxury goods group in terms of market capitalisation behind LVMH and Richemont.