Hermes Profit Beats on Ready-to-Wear Fashion

Views of the Hermes luxury goods shop on New Bond Street.
Matthew Lloyd
Views of the Hermes luxury goods shop on New Bond Street.

French luxury goods maker Hermes posted first-quarter sales ahead of forecasts, driven by strong demand for its silks, accessories and ready-to-wear.

The maker of 13,000-euro Birkin leather bags and 400-euro printed silk scarves said on Monday watch sales fell 5 percent during the period, hit by a slowdown in the Chinese market.

Hermes made revenue of 856.8 million euros ($1.12 billion) in the three months to March 31, up 12.8 percent at constant currencies, topping analysts' expectations of 11 percent.

Leather sales growth slowed in the first quarter to 7 percent from 15 percent in the fourth quarter last year but Hermes said production capacity, which held up sales in the past, would "increase steadily" in 2013.

Hermes's overall performance marked a slowdown against the same period last year which saw growth of 17.6 percent.

Comparatively, growth at archrival LVMH's fashion and leather unit came in at 3 percent in the first quarter at constant currencies, against sales growth of 14 percent last year.

"We look forward to understanding the reasons of a relatively low performance of leather goods," said Bernstein analysts in a note to clients about Hermes' figures.

Hermes is holding a conference call at 0700 GMT.

The company did not comment on its outlook for the year.