Hermes warns on profit

Hermes says sales growth would probably fall below target this year because of economic and political uncertainties.

Paris - French luxury goods group Hermes warned on Wednesday that sales growth would probably fall below target this year because of economic and political uncertainties, prompting a sharp fall in its share price.

Hermes sales in 2015 rose by 18 percent from the previous year, the company also reported, and by 8 percent once the favourable impact of the strong dollar was stripped out.

In the fourth quarter alone, sales were up 15 percent, and 7 percent at constant exchange rates, “despite the impact of the recent events in France and, to a lesser extent, in Europe”, it said.

But weakness in the luxury goods sector in the wake of terror attacks in Paris and elsewhere would probably take its toll on turnover this year, it warned.

“Due to the economic, geopolitical and monetary uncertainties around the world, sales growth in 2016 could be below the medium-term goal of 8 percent revenue growth at constant exchange rates,” it said.

Also read: Hermes to focus on women’s timepieces

Hermes, which is to publish full annual earnings in March, gave an early indication that its profit margin on operations would be close to 2014's 31.5 percent.

But stock market investors, choosing instead to focus on trouble ahead, sold Hermes shares, sending them more than 3 percent lower in early trading on the Paris stock exchange.

AFP