LONDON (ShareCast) - (Sharecast News) - Shares in Hermes International softened on Wednesday, after quarterly sales at the luxury house narrowly missed expectations, despite improved demand in China.
Sales at Hermes, best known for its iconic Birkin and Kelly bags, rose 9.6% in the three months to September end, to €3.88bn, on a constant currency basis. The rise was, however, narrowly below expectations for growth of 10%.

Within that, sales in Europe jumped 10.3% to €1.04bn, while Asia saw sales improve 7.6% to €1.98bn.

The smaller North America market also performed strongly, with sales up 14.1% at €714m.

Leather goods and saddlery saw the biggest divisional growth, jumping 13.3% to €1.7bn.

Revenues at Hermes' second-biggest unit, ready-to-wear and accessories, rose more slowly, up 6.6% at €1.16bn.

Axel Dumas, executive chair, said: "Hermes is maintaining its course, thanks to solid growth that reflects the strength of our model. We remain focused on navigating uncertainties."

As at 1130 BST, the stock had lost 4%.

Last week larger rival LVMH confirmed it had returned to growth, sending shares across the sector surging, including Hermes'.

The luxury goods sector has endured a difficult few years, on the back of macroeconomic and geopolitical uncertainty, weak consumer confidence in China and Donald Trump's trade war.

But analysts are increasingly optimistic the sector may have turned a corner.

Jefferies said: "Hermes' third quarter acceleration in sales growth, to 9.6%, will likely generate a debate among investors.

"This at a time when the shares have suffered a major sector relative derating, with markets increasingly enthused about a reboot of broader industry demand reinterpreting the consistency of Hermes' share gains as unexciting."

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