- Mar 14, 2006
- Reaction score
A more fashionable way of saying, "...when HELL freezes over" has usually been "...when Hermes [EDIT:] cuts earnings forecasts." Well, put on your tin hats folks, the end days are near: PARIS — With a worsening outlook for luxury, Deutsche Bank has cut its earnings forecasts on HermÃ¨s International by 10 percent and projects slim fourth-quarter sales growth of 7.5 percent, or 0.7 percent in organic terms. “Worsening luxury news flow, in particular from the U.S., suggests to us that HermÃ¨s will see a rapid slowdown in growth rates,” analyst Warwick Okines wrote in a report released Monday. The investment firm also trimmed its 2009 forecasts on Burberry Group plc by 12 percent, while saying it has “more confidence” in the London-based firm “relative to other luxury stocks since the business is not coming off peak margins.” It also expects further cost-saving initiatives. Burberry is due to release its third-quarter sales in mid-January, with most other luxury players reporting fourth-quarter figures in the weeks that follow. Deutsche Bank expects HermÃ¨s to post an organic sales decline of 3.7 percent in 2009, versus an estimated 10 percent gain in 2008. HermÃ¨s has been one of the most immune of Europe’s big luxury players, citing no material slowdown in the U.S. in the third quarter, when it posted organic growth of 17.9 percent. Deutsche Bank maintains a “sell” rating on the stock, with a price target of 63 euros, or $87.38 at current exchange.