PARIS: Surging demand in Asia and especially mainland China helped Birkin handbag maker Hermes post better-than-expected sales growth for the second quarter, in an encouraging signal for some of its major luxury goods rivals.
The industry has so far largely shrugged off any fallout from a Beijing-Washington trade war that could potentially hit consumer sentiment in its two biggest markets, with appetite for branded goods if anything picking among Chinese shoppers.
Hermes - along with Louis Vuitton owner LVMH and Gucci parent Kering, which are also due to report results this week - has been one of the big beneficiaries of this benign backdrop.
The French company, best known for its pricey leather goods and squared silk scarves, said sales for the April to June period grew 14.7% on a reported basis to 1.67 billion euros ($1.87 billion), and were up 12.3% at stable exchange rates.
That marked a pick-up from the 11.6% comparable sales growth a quarter earlier, when several analysts had expected a slightly more muted performance, citing a tougher comparison base.
Revenues expanded at a brisk pace across Asia, accelerating from the quarter before in spite of political protests in Hong Kong, a big regional shopping destination.
Hermes finance chief Eric du Halgouet told reporters the company had to close two of its Hong Kong stores at certain points in June due to the demonstrations, but that the drag on sales was minor.
Chinese shoppers, who makes up more than a third of the luxury goods industry's client base, have been increasingly spending at home rather than overseas, encouraged by government measures such as import tariff cuts.
Hermes said sales in continental China, where it recently revamped its e-commerce site, were particularly strong in the first half of 2019. It has just rebooted its online shopping site in Japan and will extend the overhaul to Singapore and Malaysia this year, du Halgouet said.
Hermes said operating margins for the six months to the end of June would be slightly below the record 34.5% reached in the first half of 2018, dampened by unfavourable exchange rate hedges, used to protect firms against currency swings.
It reports full results for the first half of the year on Sept. 11.
Strong Asian demand buoys sales at Birkin bag maker Hermes
Strong Asian demand buoys sales at Birkin bag maker Hermes
- Hermes has been one of the big beneficiaries of this benign backdrop
Closing Bell: Saudi main market closes the week in red at 10,526
RIYADH: Saudi equities ended Thursday’s session modestly lower, with the Tadawul All Share Index slipping 14.63 points, or 0.14 percent, to close at 10,526.09.
The MSCI Tadawul 30 Index also declined 3.66 points, or 0.26 percent, to 1,389.66. In contrast, the parallel market outperformed, as Nomu jumped 237.72 points, or 1.02 percent, to close at 23,430.93.
Market breadth on the main market remained tilted to the downside, with 156 stocks ending lower against 99 gainers.
Trading activity eased further, with volumes reaching 80.46 million shares and total traded value amounting to SR1.66 billion ($442 million).
On the movers’ board, Saudi Industrial Export Co. led the gainers, rising 6.6 percent to SR2.10, followed by Consolidated Grunenfelder Saady Holding Co., which advanced 6.43 percent to SR9.60.
Raoom Trading Co. climbed 4.36 percent to SR61.05, while Astra Industrial Group gained 4.35 percent to close at SR139. Riyadh Cables Group Co. added 3.77 percent to end the session at SR135.00.
On the downside, Methanol Chemicals Co. topped the losers’ list, falling 5.96 percent to SR7.41.
Flynas Co. retreated 5.43 percent to SR61.00, while Leejam Sports Co. dropped 5 percent to close at SR100.80.
Alramz Real Estate Co. slipped 4.64 percent to SR55.50, and Almasane Alkobra Mining Co. declined 4.55 percent to SR84.00.
On the announcement front, ACWA Power said it has completed the financial close for the Ras Mohaisen First Water Desalination Co., a reverse osmosis desalination project with a capacity of up to 300,000 cubic meters per day, alongside associated potable water storage facilities totaling 600,000 cubic meters in Saudi Arabia’s Western Province.
The project was financed through a consortium of local and international banks, with total funding of SR2.07 billion and a tenor of up to 29.5 years, while ACWA Power holds an effective 45 percent equity stake.
Shares of ACWA Power ended the session at SR185.90, up SR0.2, or 0.11 percent.
Meanwhile, Consolidated Grunenfelder Saady Holding Co. announced the sign-off of a customized solutions project with Saudi Aramco Nabors Drilling Co., valued at SR166.0 million excluding VAT.
The 24-month contract covers the sale and maintenance of field camp facilities, with the financial impact expected to begin from the first quarter of 2026.
