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Hermès promises improvement to goods after slow sales | Hermès promises improvement to goods after slow sales |
(5 months later) | |
French luxury brand Hermès promised an improvement in leather goods and watch sales later this year after overall sales grew at their slowest rate in three years. | French luxury brand Hermès promised an improvement in leather goods and watch sales later this year after overall sales grew at their slowest rate in three years. |
Sales of leather bags, which includes Hermès' €13,000 (£11,000) Birkin bag, failed to impress, due to a fall in demand in China and depressed consumer spending in Europe . | Sales of leather bags, which includes Hermès' €13,000 (£11,000) Birkin bag, failed to impress, due to a fall in demand in China and depressed consumer spending in Europe . |
Watches – which retail at up to £5,700 - were hardest hit, falling 5% due, in part, to a crackdown on gifts for Chinese officials. Politicians had become used to being given luxury watches, but new leader Xi Jinping has called for a renewed fight against corruption. | Watches – which retail at up to £5,700 - were hardest hit, falling 5% due, in part, to a crackdown on gifts for Chinese officials. Politicians had become used to being given luxury watches, but new leader Xi Jinping has called for a renewed fight against corruption. |
Overall, Hermès sales for the three months to end of March were up 12.8% to €856.8m, with most of the boost coming from accessories such as belts and gloves, with shoes and ready-to-wear clothing also performing well. | Overall, Hermès sales for the three months to end of March were up 12.8% to €856.8m, with most of the boost coming from accessories such as belts and gloves, with shoes and ready-to-wear clothing also performing well. |
Hermès also suffered a €19m hit due to negative currency fluctuations. | Hermès also suffered a €19m hit due to negative currency fluctuations. |
Chief executive Patrick Thomas blamed the slowdown in leather bags to distribution issues, particularly in Asia. | Chief executive Patrick Thomas blamed the slowdown in leather bags to distribution issues, particularly in Asia. |
He said: "It was problems with deliveries, as production was weak in January and February, but our sales growth should stabilise to about 8-9% this year." | He said: "It was problems with deliveries, as production was weak in January and February, but our sales growth should stabilise to about 8-9% this year." |
Leather bag sales roughly halved from the fourth quarter to 7%. | Leather bag sales roughly halved from the fourth quarter to 7%. |
Thomas added he expected a turnaround in the watch operation, revealing Hermès has bought a controlling share in Swiss watchmaker Joseph Erard, increasing its share from 32.5% to 51%. | Thomas added he expected a turnaround in the watch operation, revealing Hermès has bought a controlling share in Swiss watchmaker Joseph Erard, increasing its share from 32.5% to 51%. |
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