Hermes, Remy Cointreau dampen fears of waning Chinese demand

Fri Jul 20, 2012 4:29am EDT
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By Nina Sovich and Dominique Vidalon

PARIS (Reuters) - The Chinese are still snapping up Birkin bags and rare Cognacs, boosting sales for European luxury goods companies Hermes and Remy Cointreau and calming fears that demand may be cooling.

Luxury goods companies have become increasingly dependent on China as European customers pull back, and they are anxiously watching for any sign that demand in the world's second largest economy is slowing.

Those fears abated on Thursday when French spirits group Remy Cointreau beat forecasts with a 24.4 percent rise in first-quarter sales, driven by robust demand for its cognac in Asia and the United States.

Similarly, Hermes reported a 13.4 percent rise in second-quarter sales supported by strong growth in the Asia-Pacific region outside of Japan, which rose 26.9 percent.

"We see no slowdown in China," Hermes Chief Executive Patrick Thomas said in a phone interview.

Hermes derives 32 percent of its sales from Asia Pacific excluding Japan, making it one of the company's most important markets. Growth in Asia helped offset slower growth in France and the U.S.

"The good surprise is Asia, with a net acceleration despite a difficult (strong) base of comparison." said Thomas Mesmin, a Paris based analyst covering Hermes for CA Chevreaux.

CHINA STRONG   Continued...

A customer looks into a giant Hermes Kelly handbag at a Hermes boutique in Nanjing, Jiangsu province February 17, 2012. REUTERS/China Daily