Luxury house Hermes has reported a rise in second quarter sales of 6 percent ot €324.3 million (£224.8 million) at current exchange. Sales in the second half ended 30 June climbed 4.6 percent to €649.1 million. At constant exchange rates the increase would have been 6.2 percent.

A research note released by investment bank Merrill Lynch, which downgraded Hermes status from 'buy' to 'neutral' stated: "The soft spot is Japan . While this performance is disappointing at a time when all other players are performing well in Japan , we stress that Hermes sales have grown by 13 per cent per annum between 2001 and 2004 in this market. As a result, the company today faces more difficult comps than sector peers, but still has a strong potential in Japan in our view."

Hermes sales rose noticably in the US , up 14.7 percent to €95.3 million. By sector, Hermes silk goods performed well, with sales up by 10 per cent.