Hermès International SCA, the French luxury handbag maker, reported a 20 percent increase in first-half earnings as sales growth accelerated in Japan and kept its forecast for the year unchanged even as China’s economic slowdown weighed on sales of luxury handbags there. Operating income grew to 748 million euros ($842 million), Paris-based Hermès said Friday in a statement. Analysts predicted 737 million euros, according to the median of 13 estimates compiled by Bloomberg. Sales rose 21 percent to 2.3 billion euros.
Luxury sales are surging in Japan as more wealthy Chinese choose to shop there rather than in Hong Kong following protests in the island city and a clampdown on lavish spending back home. Hermès’s Japanese revenue climbed 20 percent in the half at constant exchange rates, compared with a 7 percent increase in the rest of Asia as Hong Kong was “difficult,” it said. “Hermès is the most defensive name in the luxury space,” Luca Solca, an analyst at Exane BNP Paribas, said via e-mail. The company’s efforts to starve demand with long waiting lists mean its growth and margin performance “is more stable than peers.”
And speaking of Hermès, the brand's CEO Axel Dumas said on Friday that the brand is in talks with actress Jane Birkin about her request to remove her name from it's iconic Birkin bag because she disagrees with the farming and slaughtering practices of one of its suppliers.
In a statement last month, Birkin sought to disassociate herself from the Hermès bags — some of which are constructed from crocodile skins — after seeing a video showing how live reptiles were skinned or sawed open at a farm in Texas that supplies Hermès. Dumas said the brand has launched an investigation into the farm's practices and is trying to impose higher ethical standards regarding the treatment of crocodiles at all its suppliers.
"We have preserved a relationship of trust and friendship with Jane Birkin," Dumas said on Friday at the company's half-year results presentation."We are in talks with her" about the matter, Dumas said, adding that for the moment, no lawyers were involved. "There has been a lot of emotion on her behalf, on our behalf, we still see each other," he further stated. More to come ...
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