PARIS – What luxury slowdown? Hermès International continues to buck the trend and outpace its peers, with sales up 11.3 percent at constant currency in the third quarter to 3.7 billion euros.
That puts the Birkin bag maker well ahead of other French luxury goods players, such as Kering, which reported sales down 16 percent, and LVMH Moët Hennessy Louis Vuitton, which reported a 4.4 percent drop in revenues in the third quarter.
“In a more uncertain economic and geopolitical context, I want to thank all employees for the robust third-quarter performance, and our customers for their loyalty. Thanks to the singularity of its model, Hermès is continuing its recruitments and long-term investments,” said Hermès chief executive officer Axel Dumas.
“Thanks to its unique business model, Hermès is pursing its long-term development strategy based on creativity, maintaining control over know-how and singular communication,” the company said in a statement.
Hermès continues to be boosted by its resilient ultra-wealthy and loyal client base.
“In a more complex economic and geopolitical context, the group continues its development with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients,” it said.
The results handily beat analysts’ expectations of 10.5 percent growth. “We see Hermès as the best current opportunity to protect the portfolio from a difficult [fourth quarter] – suffering from a global cyclical slowdown exacerbated by structural issues in China,” said Bernstein analyst Luca Solca.
Sales in Japan rose 23 percent in the three months to Sept. 30 on the strength of local clients. The company opened a new store in Tokyo in June, the second new store in the country this year.
China, which has tripped up luxury firms as consumers there have slowed their spending as the country’s economic outlook and housing market weakens, showed signs of softness for Hermès as well. The company has seen a “downturn in traffic in Greater China…since the end of the Chinese New Year,” it said. Still, the Asia region outside of Japan saw 7 percent growth, supported by sales in Korea, Singapore, Thailand and Australia.
Hermès is continuing its investment in China, and reopened its newly renovated Shenzhen store earlier this week. It also reopened its Melbourne store in August.
Consolidated revenue in the first nine months of the year was up 14 percent year-over-year at constant exchange to 11.2 billion euros, despite the company taking a 242-million-euro hit on currency fluctuations.
At the end of September 2024, all the geographical areas posted growth, and the exclusive distribution network continued its development.
Strong sales continued to stay steady in the Americas, up 13 percent in the time period, while Europe excluding France was up 18 percent on the strength of tourist flows throughout the summer.
France showed a 14 percent boost in sales, “despite a slight slowdown in traffic in the Parisian stores due to the Olympic games.”
Sales of watches were down 6 percent year-over-year, the sole category decline.
Leather goods were up 17 percent as the company introduced new handbag models, and increased its production capacity with a new factory in Riom in central France, which opened in September, marking its 23rd leather goods factory.
Its ready-to-wear continued to grow, with sales up 15 percent year-over-year, and sales of silk scarves up 2 percent in the three months to the end of September.
After entering the beauty business in 2020, the category continues to perform well with sales up 7 percent with several new offerings, including a new eyeliner and lip pencil in the third quarter as well as a new fragrance.
The company’s jewelry division posted a 17 percent gain in the quarter.
“In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates,” the company said.
