* Hermes strikes confident note for 2017
* Shares fall, analysts cite pricey multiples on stock
* Company keeps financial goals
(Adds CEO comments, shares, analyst )
By Dominique Vidalon and Pascale Denis
PARIS, Feb 8 French luxury goods group Hermes
kept its full year profitability goal on Wednesday
after posting higher fourth quarter sales, which provided
further evidence of a broader recovery in the luxury industry.
Hermes, known for its $10,000 Birkin bags and $400 printed
silk scarves, struck an upbeat note for 2017 in spite of
broader, underlying political and economic uncertainties.
"We believe we will continue to clearly outperform the
sector because of fundamentals that rely on true know-how and
creativity," Chief Executive Axel Dumas told a conference call.
Hermes' shares, however, fell 1.3 percent with analysts at
Exane BNP Paribas and CM-CIC Securities saying the stock looked
relatively expensive. Hermes shares rose 25 percent last year
and the stock is up around 2 percent so far in 2016.
Fourth quarter sales reached 1.51 billion euros ($1.60
billion), with growth at constant exchange rates of 6.6 percent
slowing from 8.8 percent in the third quarter. This compared
with analysts' expectations of 7.1 percent growth.
Hermes said growth was driven mainly by its leather goods
arm, which makes 50 percent of group sales, while other
divisions also performed well although its watches unit lagged.
Hermes joined other luxury companies such as LVMH
in reporting an improvement in the sector, which has suffered
from slowing demand in China while Islamist militant attacks in
France have also deterred tourists from Europe.
Dumas said the sales improvement came from all regions, and
highlighted positive signs for Hermes from Asia.
"We see a positive momentum in Asia. In China we are the
most desired brand," he said.
The group, which reports full year earnings on March 22,
kept its forecast for a full year 2016 operating margin being
slightly higher than 2015's 31.8 percent of sales.
Hermes added it was keeping an "ambitious" medium-term goal
for revenue growth at constant exchange rates.
However, both Exane BNP Paribas and CM-CIC Securities said
Hermes's shares were now looking relatively expensive.
Exane BNP Paribas pointed to how Hermes' was trading on a
premium of 31 percent to the rest of the luxury goods industry,
based on its 2017 price-to-earnings ratio of 34.8.
"We believe that the Hermes multiple is bound to move back
toward the industry average over time," added Exane BNP analyst
($1 = 0.9377 euros)
(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)