Hermes boss predicts terrorism will hit luxury sales
Published 24/03/2016 | 02:30
Hermes International's chief executive, Axel Dumas, yesterday forecast a difficult year with subdued growth as terrorism saps tourist spending, the source of a third of the luxury industry's sales.
"We haven't had the same level of tourism in France this year as before," Mr Dumas told reporters in Paris as the company reported 2015 earnings that rose 19pc.
He said 2016 will be "complicated" by headwinds the industry faces across the globe, yet struck a resilient tone: "We don't have to panic. A challenge never hurt anyone."
Tuesday's bombings in Brussels worsened the outlook for the luxury market, a third of which comes from purchases by tourists, according to consultants Bain & Co.
Tourist spending had already declined 5pc in Europe, dragged down by a 16pc drop in France following the November attacks in Paris, according to Global Blue, which handles payment processing for tax-free shopping. Hermes said sales in France rose 6pc, faring "remarkably well" despite the slowdown after the Paris tragedy.
It aims to offset a drop in tourist spending there by tapping demand in other cities such as London and Milan, Dumas said. The stock rose 2.5pc to €319.10 as of 10:49am in Paris yesterday.
Operating profit rose 19pc to €1.54bn. Analysts predicted €1.52bn. (Bloomberg)