BIRKIN bag maker Hermes reported on Thursday (Oct 24) an 11.3 per cent rise in third-quarter sales, continuing to outshine rivals hit hard by a downturn in China as its luxury handbags lure wealthy shoppers.
The French luxury company generated 3.7 billion euros (S$5.3 billion) in revenue for the three months ending in September, an 11.3 per cent rise at constant exchange rates.
The figure was in line with an analyst consensus estimate of 11 per cent growth cited by Jefferies.
“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,” said Axel Dumas, executive chairman of Hermes.
“Thanks to the singularity of its model, Hermes is continuing its recruitments and long-term investments,” he said.
A sector-wide slowdown has affected labels across the high-end spectrum.
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Luxury bellwether LVMH missed expectations last week and flagged a drop in Chinese consumer confidence to Covid-era lows, with a deterioration in demand for fashion over the quarter.
Late on Wednesday, Kering warned its 2024 operating income would almost halve to its lowest in years as weak demand in China deepened the struggles of the French luxury goods group’s main label Gucci.
Hermes’ famously classic designs and tight management of production and stock have helped reinforce the label’s aura of exclusivity and made the company one of the most consistent performers in the industry.
Handbags such as the coveted US$10,000 plus Birkin model are affordable only for the wealthiest shoppers – who are typically the more immune to choppy economic conditions.
But showing limits of its resilience, executives earlier this year said that Hermes was seeing slightly less traffic from aspirational clients, impacting higher volume products like fashion accessories such as silk scarves.
Hermes shares have risen nearly 9 per cent since the start of the year, outpacing rivals, with LVMH down nearly 15 per cent, Moncler down 3.3 per cent and Kering, which is working to turn around Gucci, down 40 per cent. REUTERS
