Hermes says H1 margin to dip on weaker euro

Hermes forecast on Tuesday that its first-half operating margin would decline slightly year-on-year because of the weaker euro, but the luxury goods company stuck to its medium-term sales growth target.

The luxury bag maker said revenue growth at constant exchange rates accelerated in the second quarter to 9.7 percent from 8 percent in the first three months of the year, boosted by leather goods and Japan.

Revenue was 1.177 billion euros ($1.27 billion). Analysts had expected quarterly sales to rise by 8.5-9 percent.

"Japan generated an excellent performance over the first six months of the year, thanks to its selective distribution network," Hermes said in a statement.

The maker of 350-euro printed silk scarves and 9,000 Birkin calf leather handbags said its leather goods and saddlery division posted 14.9 percent quarterly growth at constant exchange rates, with Japan achieving a 26.5 percent rise.

The group confirmed its medium-term objective of increasing group turnover at constant rates by around 8 percent.

Hermes added that its first-half operating margin "should be down slightly in comparison with the first half of 2014" because of the weaker euro.

The margin reached 32.6 percent in the first six months of last year and was 31.5 percent over the full year.