PARIS — Blaming topsy-turvy weather in Japan and late delivery of its new Jean Paul Gaultier designed ready-to-wear, Hermès International reported weaker-than-expected third-quarter sales of 306.2 million euros, or $373.9 million, an increase of 1.4 percent.
At constant exchange rates, the gain was 4.4 percent. Dollar figures for quarterly results are at the average exchange rate.
Although analysts allowed that Hermès came up against some of the toughest comps in the sector, the figures also broadcast some troubling signals for luxury.
In a research report, Morgan Stanley luxury analyst Claire Kent highlighted a big shortfall in Hermès sales in Asia Pacific as “duty-free chains took a dimmer view on the outlook for tourism.”
Also, tourist recovery in Europe that looked so promising in the second quarter “petered out” by the third, Kent noted. Meanwhile, typhoons and heat waves in Japan made consumers “forgo shopping and stay at home.”
Two problems, however, were specific to Hermès: production snafus in rtw and leather watch straps, which meant missed sales in the fall selling period.
“Although the [rtw] collection was well received by buyers, customers did not get the chance to fully appreciate the new collection,” Kent wrote. She trimmed her earnings-per-share forecasts for 2004 and 2005 to 5.94 euros and 6.54 euros, or $7.68 and $8.45, respectively, from 6.15 euros and 6.91 euros, or $7.95 and $8.93.
Antoine Belge, analyst at HSBC in Paris, also cut his Hermès estimates and called the results “disappointing.” Still, he did not attribute a broader significance to the unexpected slowdown of a luxury thoroughbred.
“At this stage, we believe there is no reason to extrapolate Hermès’ weak performance to the rest of the luxury sector,” he wrote, noting that management revised its full-year sales guidance down to 8 to 9 percent organic growth, versus a previous target of 9 to 10 percent.
By region, third-quarter sales fell 3.1 percent in France to 55.8 million euros, or $68.1 million, while Europe, excluding France, inched 1.8 percent to 51 million euros, or $62.3 million. Sales rose 7.2 percent in Asia Pacific to 51.9 million euros, or $63.4 million; 3.8 percent in Japan to 89.9 million euros, or $109.8 million; 5.1 percent in the rest of Asia to 141.8 million euros, or $173.1 million, and 12.4 percent in the Americas to 47.4 million euros, or $57.9 million.Sales of bags and luggage, Hermès’ core category, rose 8.5 percent to 119.5 million euros, or $145.9 million, with silks up 1.5 percent to 30.4 million euros, or $37.1 million.
Sales of rtw and fashion accessories, which reflect Gaultier’s debut effort for the house, inched up 0.8 percent to 73 million euros, or $89.1 million, while sales of watches slipped 4.3 percent to 23.6 million euros, or $28.8 million. Perfume sales rose 11.5 percent to 13.6 million euros, or $16.6 million.
For the nine months ended Sept. 30, Hermès sales increased 8.9 percent to 926.7 million euros, or $1.14 billion. Stripping out currency effects, the increase was 12.3 percent.
Shares in Hermès fell 3.2 percent Monday to close at 151.1 euros, or $195.3, on the Paris Bourse.
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