Hermès’ revenue for the first-quarter of 2016 was €1.19 billion, up 6.2% at constant exchange rates, surpassing analysts’ estimates of 5.8% and raising the Parisian stock levels by 2.7% at the announcement on April 28.

The results were mainly led by leather goods and saddlery whose revenue rose 15%, beating the 12% consensus. Hermès has been recently expanding its leather production facilities in France, meaning higher supply volumes. It has just opened its 15th leather workshop and says further investments are planned.

Sales of every other product line were down in the period. According to Axel Dumas, CEO, Hermès, sales at retail stores in London and Milan are back to normal but Paris is still impacted by the recent terrorist attacks.

A drop in tourism combined with lower oil prices has impacted sales in the Middle East, according to Dumas. Sales fell in Macau but were stable in Hong Kong, which remains weak. In North America, retail sales were up 4.4%.

Hermès expects 2016 to be difficult and says revenue growth could be below 8% this year, excluding currency swings.

Source: Bloomberg/Reuters