Hermès bags a fortune from strong growth in China

Selling bull-calfskin leather handbags and expensive silk scarves has never been so profitable.

French luxury brand Hermès has reported forecast-beating results for the final quarter of last year and said operating margin is expected to be slightly above its all-time high of 31.2% achieved in 2011 — putting the group at its most profitable.

Full-year numbers are out on March 21 but today it reported 18.5% sales growth in the last three months of the year — up from 15.7% in the third quarter and 13.4% in the second quarter.

The Paris-based fashion house, which started life as a saddlery in 1837 and is now famous for its Birkin and Kelly handbags which sell for more than £10,000, recorded revenues of €3.48 billion (£2.9 billion) — a rise of 22.6% at the present exchange rates for the period. Sales for the fourth quarter came in at €1.04 billion.

Its strong results were boosted by growth in China. Some luxury goods brands recently reported signs of a slowdown in demand in the Far East but Hermès is a relative newcomer to the region and revealed growth of more than 25% for non-Japan Asia.