Luxury goods seller Hermès International has announced that its sales continued to grow during the third quarter of this year. Despite concerns about a wider slowdown in the luxury sector, the French fashion house reported a 16% increase in sales to €3.36 billion ($3.58 billion). This exceeded the predictions of five analysts polled by FactSet, who had estimated sales worth €3.31 billion.
Shares in Hermès rose by 3% in trading on Tuesday morning, building on a 34% increase over the past 12 months. The positive news from Hermès contrasts with recent underwhelming results from luxury goods sellers, which caused shares to drop. However, Hermès has experienced double-digit growth across all regions and segments of its business, including a 21% increase in sales from its division covering Asia excluding Japan. This segment accounts for 48% of the company’s revenues.
The strong performance of Hermès is expected to calm investors’ fears about a potential downturn in the luxury goods market. Concerns have been raised due to the health of China’s economy and signs that demand for jewelry and expensive handbags may be slowing down. Analysts at Citi have highlighted that Hermès benefits from having a loyal customer base of higher-end shoppers who are less affected by inflation. Additionally, the company has below-industry-average exposure to tourist demand, which has been slower-than-expected in China’s tourism sector.
Despite a modest slowdown in sales from its China business compared to the exceptional performance in the third quarter of 2022, Hermès achieved impressive growth in the third quarter. The company’s executive chairman, Axel Dumas, attributed this success to the widespread desirability of Hermès collections and the continued momentum in Asia and the Americas.
This latest report from Hermès demonstrates the brand’s resilience and ability to thrive even in challenging market conditions. With sustained growth and a strong customer base, Hermès is well-positioned for continued success in the luxury goods industry.