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France - Economy

France's Hermes posts record profit margin

Hermes said on Wednesday its net profit rose 13 percent in the first half of the year, scoring a record profit margin and defying stagnating sales in much of the luxury sector.

A worker at an Hermes factory (file photo)
A worker at an Hermes factory (file photo) Reuters/Benoit Tessier
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The French company said sales rose six percent to 2.44 billion euros, driven by a 16 percent gain in sales of its leather handbags, including its signature Birkin bag named for British singer Jane Birkin. The company's perfume sector was also up, by four percent.

Sales of its signature silk square scarves, however, fell by seven percent, with the company hinting that a string of terror attacks in Europe that caused regional tourism to slump, was behind the drop.

Nevertheless, Europe posted an 8 percent gain in sales overall, besting the five percent growth in Asia, excluding Japan where sales shot up by 10 percent despite a strengthening of the yen.

The company said its operating profit margin rose to a record 33.9 percent of sales, mainly due to a number of profitable currency hedges.

Recurring operating profit rose by 11 percent, compared to the first half of 2015, to 827 million euros.

Hermes confirmed its 2016 target of eight percent sales growth at constant exchange rates.

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