Hermès Reports 11% Sales Surge to $4 Billion, Defying Luxury Sector Slowdown

Luxury brand Hermès has defied the downturn in the luxury retail sector, reporting a notable rise in third-quarter sales, which stands in stark contrast to competitors hit by China’s economic challenges.

The French company posted revenue of $4 billion for the quarter ending in September, marking an 11.3% increase at constant exchange rates, slightly surpassing analysts’ expectations. Despite facing a challenging economic and geopolitical climate, Hermès maintained its medium-term outlook for steady revenue growth.

Bernstein luxury goods analyst Luca Solca highlighted Hermès as the strongest option to safeguard portfolios during a challenging second half of the year, worsened by China’s structural issues and a global economic slowdown. Solca observed that all Hermès divisions, apart from watches, experienced higher-than-anticipated growth.

Executive Chairman Axel Dumas attributed this resilience to Hermès’ unique business model, which hinges on exclusivity and strict production and inventory control. This approach has allowed the company to maintain recruitment and invest strategically for the future. High-end items like the Birkin bag, priced at over $10,820, remain accessible only to the wealthiest consumers, who are generally unaffected by economic fluctuations. Hermès is also planning to open a new store in Beijing next year.

Regional sales results were strong across the board: Asia (excluding Japan) saw a 7% increase, while Europe (excluding France) experienced an 18% rise, driven by local demand and sustained tourist spending. In France, sales rose by 14%, despite slightly reduced footfall due to the Olympic Games. The American market continued its growth trajectory with a 13% increase.

Since the beginning of the year, Hermès shares have risen nearly 9%, outperforming competitors like LVMH, which is down 15%, Moncler down 3.3%, and Kering, which is working to revitalize Gucci, down 40%. Hermès shares closed up 1.07%, or around $24, reaching $2,25 in Paris.

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