Luxury goods house Hermès International witnessed a slowdown in sales for the second quarter. The company attributed the slowdown to early spring-summer deliveries, but said it would achieve its top-line target of 7 to 7.5 percent growth for the fiscal year. Sales for the quarter ended 30 June gained 4.5 percent to €339 million, thanks to strong sales of perfumes, leather goods and jewellery. "We are totally in line with our expectations," said Mireille Maury, managing director of finance and administration. She pointed out a 9 percent increase in sales during the period of the company's own retail network and said that the outlook for July remained positive. Sales for the first half rose 7.9 percent to €700.5 million.

Nevertheless, analysts were disappointed with the results in an otherwise upbeat luxury sector. Earlier this week LVMH reported a 10.5 percent increase in second quarter sales and a 13 percent rise for the first half. "Once again, Hermès' wholesale business (30 percent of total sales) proves very volatile," WWD quoted HSBC analyst Antoine Belge as having written in a research note. "In 2006, Hermès should once again underperform the industry." He added that due to a weak yen, Japanese are spending less on silks, causing disappointing results of this product. Maury, however, noted that sales of silk products at Hermès own stores rose 7 percent in the second quarter. The sale of leather purses gained 20 percent, but ready-to-wear sales remained flat.

On a more positive note, perfume sales soared 34.1, thanks mainly to the strong sale of men's fragrance Terre d' Hermès. Due to strong demand for small leather goods and jewellery, sales of other sectors gained 24 percent to €34.6 million.

Sales in Europe , excluding France , rose 17.9 percent to €64.4 million. The company is continuing to open shops in Europe . It recently opened boutiques in Amsterdam and Copenhagen and a shop in Venice will open in October. The US is also fairing well as geographical region. "The trend is also very strong in the US ," said Maury, pointing out a rise of 11.7 percent to €51.3 million. Meanwhile, sales in the Asian Pacific region dropped 0.6 percent, despite "strong development" in China , as described by Maury. She said that the opening of a Maison Hermès in Seoul in November would bring about a turnaround in the region.