French luxury brand Hermès promised an improvement in leather goods and watch sales later this year after overall sales grew at their slowest rate in three years.
Sales of leather bags, which includes Hermès' €13,000 (£11,000) Birkin bag, failed to impress, due to a fall in demand in China and depressed consumer spending in Europe .
Watches – which retail at up to £5,700 - were hardest hit, falling 5% due, in part, to a crackdown on gifts for Chinese officials. Politicians had become used to being given luxury watches, but new leader Xi Jinping has called for a renewed fight against corruption.
Overall, Hermès sales for the three months to end of March were up 12.8% to €856.8m, with most of the boost coming from accessories such as belts and gloves, with shoes and ready-to-wear clothing also performing well.
Hermès also suffered a €19m hit due to negative currency fluctuations.
Chief executive Patrick Thomas blamed the slowdown in leather bags to distribution issues, particularly in Asia.
He said: "It was problems with deliveries, as production was weak in January and February, but our sales growth should stabilise to about 8-9% this year."
Leather bag sales roughly halved from the fourth quarter to 7%.
Thomas added he expected a turnaround in the watch operation, revealing Hermès has bought a controlling share in Swiss watchmaker Joseph Erard, increasing its share from 32.5% to 51%.
