Business World

Monday 5 December 2016

Tannery deal secures luxury leather supply

Andrew Roberts

Published 27/11/2015 | 02:30

Hermes coping with downturn better than its competitors
Hermes coping with downturn better than its competitors

French luxury brand Hermes has acquired calf-leather supplier Tanneries du Puy in France in a deal that will save more than 100 jobs in the Auvergne-Rhone Alps region and reflects strategy of preserving know-how and securing its supply of materials, the company said.

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The maker of Birkin handbags is a byword for luxury, and like its rivals recent results show it is not immune from slowing luxury demand.

Asian sales growth at the French firm slowed to 1.5pc in the third quarter of this year, excluding Japan, from 6pc in the second quarter as anti-extravagance measures in China weighed on spending.

Sales in the Americas grew just 2pc at constant exchange rates as stock market volatility and a strong dollar curb spending by locals and tourists.

Despite that, results published earlier this month showed Paris-based Hermes still delivered revenue growth that matched analysts' estimates, with total sales climbing 15pc to €1.14bn.

By keeping the supply of €8,800 Birkin bags limited, Hermes is weathering slowing luxury demand better than lower-priced competitors such as Burberry Group, which has forecast profit to decline a second year.

Having more than 40 stores in Japan also helps as the yuan was higher against the yen during the quarter, attracting Chinese shoppers. Sales in Japan rose 17pc at constant exchange.

(Bloomberg)

Irish Independent

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