Hermes 2016 profit climbs on handbag sales, Europe growth

Zurich: French luxury handbag maker Hermes International reported a 10 per cent increase in full-year profit, helped by European tourism shifting towards the UK and Italy.
Terrorist attacks in France and the decline of the pound are drawing tourists to London and Rome, Chief Executive Officer Axel Dumas said on a call with reporters. The company’s renovated Bocca di Leone store in Italy’s capital is benefiting, he added.
The luxury industry has been reporting signs of improvement after years of ebbing demand in China and a slowdown in European tourism. Tiffany reported higher-than-expected earnings last week, helped by new stores in Asia and higher-priced jewellery. Gucci owner Kering has reported its fastest revenue increase in four years. Hermes reiterated its forecast for "ambitious” sales growth in the medium term.
Operating profit climbed to 1.7 billion euros ($1.8 billion) on an adjusted basis, the Paris-based company said on Wednesday in a statement, in line with the average analyst estimate. The profit margin widened to a record 32.6 per cent of sales from 31.8 per cent in 2015.
Hermes shares fell 0.6 per cent in early trading in Paris. The stock has risen 37 per cent in the past year, outpacing the 12 per cent increase in a Bloomberg Intelligence index of luxury-goods stocks.