Hermés sales slowdown second quarter

Hermes International said sales growth would slow in the second half due to limits on its ability to restock stores. Net income climbed 49 percent to 290.9 million euros ($420 million) in the first six months from 194.6 million euros a year earlier.

"July and August was not quite at the level of last year," Thomas said. "This is not at all due to a drop in the number of people in our stores. There are stores where we are a little tight on stocks. This isn't an alert. It's not serious. We are selling at the rate we are producing," Chief Executive Officer Patrick Thomas said at a presentation in Paris.

The luxury handbags maker released that its sales rose 22 percent to 1.31 billion euros. Growth will be slower in the second half than in the same period of 2010 as the company struggles to get products into stores quickly enough to meet demand.

Hermes raised its annual revenue target last month and said the underlying operating margin will be close to the record level of 2010 after second-quarter sales increased faster than analysts estimated. The company bought back about 1 percent of its share capital in June and August as LVMH Moet Hennessy Louis Vuitton SA boosted its stake to 21.4 percent in the first six months of 2011.

With regards to the share buybacks, "to our knowledge no shares were bought from members of the family," Thomas said. "They were bought on the market. Before LVMH became a shareholder we weren't in a hurry to buy shares. Now there is a worrying drop in the free float." There are "no plans" to delist the company, he said.

The company reiterated that it expects sales to rise between 12 percent and 14 percent at constant exchange rates this year. First-half operating profit rose 37 percent to 418 million euros. Thomas forecast 2011 sales growth of 14 percent and comparable profitability as last year.

Angela González-Rodríguez