(Bloomberg) -- Hermes International said first-half profitability will probably match last year’s record high as a boom in Chinese luxury demand showed no signs of slowing.
Second-quarter sales rose 12 percent excluding currency swings to 1.46 billion euros ($1.7 billion), Paris-based Hermes said in a statement Friday. Analysts had expected 1.44 billion euros. The company forecast a first-half margin excluding non-recurring items near the year-earlier level.
"For China I really don’t see any change of pace," Chief Executive Officer Axel Dumas said on a call with reporters, adding that the company is watching Chinese macro indicators like the Shanghai Stock Exchange and real estate closely. "Our clients are much more taking into account their net worth than their revenue, so any change there we need to take care."
Hermes is more insulated from luxury’s boom-and-bust cycles by long waiting lists for iconic leather goods like the $10,000-plus Birkin bag. But the continued high demand Hermes is seeing in China gives a positive signal for French luxury conglomerates LVMH and Kering, which report earnings next week.
To contact the reporter on this story: Robert Williams in Paris at rwilliams323@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier
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