Hermes lowers outlook

PARIS - Hermes International, the maker of Kelly and Birkin handbags, cut its full year sales forecast on Thursday after retail growth slowed in October.

Hermes said it is lowering its expectations for the full-year "due to the present economic environment and the importance of year end sales."

It now expects growth to between 9 and 10 percent at constant exchange rates — or 7-8 percent growth excluding its acquisition of leather company Soficuir. In September, Hermes said it thought it could achieve full year sales growth of 12 percent, or 10 percent without Soficuir.

The French luxury goods company reported sales growth of 4 percent in the third quarter to 410.5 million euros ($528.31 million) from 394.7 million euros a year earlier. At constant exchange rates, growth was 7.6 percent.

In October, sales grew "at a more moderate rate" of 6 percent, the company said.

Shares closed down 5.3 percent at 96 euros ($122.18) in Paris.

In the fourth quarter, Hermes said it plans to open or renovate seven branches, including a new store in San Diego and several projects in Asia.

In the third quarter, sales at Hermes' own stores were mostly positive, while they fell at specialist outlets, the company said.

In the Americas, sales advanced 8.3 percent, a "solid momentum" helped by the Wall Street store which opened mid-2007, the company said. European sales were down slightly by 0.2 percent, and were up 4.9 percent in Asia.

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