Hermès offsets Chinese slowdown with strong leather bags sales

French maison acknowledged a “slowdown in China's luxury market" as Chinese officials cut back on ostentatious gifts

Demand for expensive leather bags off-set a slowdown in China for French luxury brand Hermès as it beat analyst estimates for the thirdquarter.

The silk scarves and Birkin bag maker reported sales growth of 11.1 per cent to €990.6 million as demand for leather accessories boosted the Paris based brand.

Sales in Japan were better than expected while its American sales – up 14 per cent - remained strong. However fears that luxury goods brands are suffering at the hands of a Chinese spending slowdown will be raised after it reported sales in its watch business were down 10 per cent

For the first time it also acknowledged a “slowdown in China's luxury market". A crackdown on ostentatious spending by government officials in the country has hit sales of products including watches and expensive spirits such as cognac.

The group said it retains its “mid-term objective” of sales growth of around 10 per cent but said its operating margin could be “slightly less” than the all-time high achieved last year of 32.4 per cent due to currency swings.