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Hermes flags strong rebound in China, posts record margin

(Source: Reuters)

Sales at Birkin bag maker Hermes rose sharply in the second quarter, lifted by strong growth in Europe and the US, and rebounding strongly in China in June.

Following lockdowns in China in April and May the French leather goods company, which is also known for its silk scarves with equestrian prints, said that sales bounced back strongly in the last month of the quarter.

Luxury retailers were hit strongly by measures to restrict movement in key Chinese cities such as Shanghai and Beijing, with most reporting an over thirty percent drop in sales in the country – a crucial market for the industry – over the quarter.

Hermes Executive Chairman Axel Dumas declined to give a figure for the group’s Chinese sales in the quarter but said they had fallen less than the levels reported by rivals. He said the June rebound had not fully offset the decline in April and May.

Overall sales in the three months to June came to 2.7 billion euros (US$2.76 billion), a 19.5 per cent rise at constant exchange rates, which strips out currency fluctuations.

Hermes expanded operating margins to a record 42 per cent in the first half of the year, the highest level in the industry.

  • Reporting by Mimosa Spencer, editing by Silvia Aloisi, of Reuters.

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