PARIS, France — Hermès International SCA, the French luxury handbag maker, reported a 20 percent increase in first-half earnings as sales growth accelerated in Japan.
Earnings before interest and tax rose to 748 million euros ($842 million), Paris-based Hermès said Friday in a statement before European markets opened. Analysts predicted 737 million euros, according to the median of 13 estimates compiled by Bloomberg. Sales rose 21 percent to 2.3 billion euros.
The maker of Kelly bags and silk scarves said last month that the operating margin would fall slightly because of the weaker euro. The measure of earnings as a proportion of sales narrowed to 32.5 percent from 32.6 percent, Hermès said Friday. The company didn’t increase prices enough in Japan, where Chinese tourists helped lift sales 27 percent in the second quarter, according to analysts at Exane BNP Paribas.
Hermès reiterated its medium-term target of 8 percent revenue growth at constant exchange rates and said the profit margin will narrow this year because of currency fluctuations.
Chinese consumers have been traveling to Japan and Europe to shop for luxury goods after a clampdown on lavish spending back home and protests in Hong Kong. Chinese policy makers this month devalued the yuan the most in two decades amid signs of decelerating growth in the world’s second-largest economy.
By Andrew Roberts; editors: Matthew Boyle, Paul Jarvis, Phil Serafino.