Paris (AFP) – French luxury group Hermes confirmed Wednesday its outlook for full-year sales growth as it turned rising revenue for all parts of the world in the first half despite global economic uncertainty. The group, known for its silk scarves and leather handbags, also said it might be able to avoid further price hikes in the United States following the weekend deal that will see EU goods entering the US face a 15-percent baseline tariff.
First-half sales rose by 7.1 percent to 8 billion euros ($9.2 billion), including double-digit growth in the United States. Excluding currency effects, which had a negative impact of 77 million euros on revenue in the first half of the year, sales would have risen by eight percent. Sales rose by three percent in the Asia region excluding Japan, with the company reporting increased sales in China, a key market for luxury firms that has been soft recently. “I don’t see at the moment a fundamental change in the sales climate in China, which remains favourable for us,” chief executive Axel Dumas told journalists.
Net profit dipped five percent in the first half of the year to 2.2 billion due to an exceptional tax France levied on major firms, but Hermes said its recurring operating profit had climbed six percent to 3.3 billion. Dumas said he was waiting for more details about the EU-US trade deal. The company raised its prices by five percent after the United States introduced a global baseline 10 percent rate in April. However, if the 15 percent rate is a 10-percentage point increase from the roughly five percent rate that was in place before Trump took office, Dumas stated, “there is no reason to raise prices.” He also noted the effect of the dollar-euro exchange rate. “We have a dollar which has fallen a lot and that has as much if not more of an impact than tariffs,” said Dumas.
Hermes confirmed its full-year outlook. “In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates,” it said. Hermes shares slumped more than four percent in midday trading, while the Paris CAC 40 index rose 0.4 percent.
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