Hermes sales jumped as wealthy shoppers in the US and Europe splurged on the French company’s pricey Birkin and Kelly bags.
Revenue rose about 16% at constant exchange rates in the third quarter, Hermes International said in a statement Tuesday. Analysts had expected a gain of 13%. Growth in the Americas topped estimates, while the performance in Asia Pacific excluding Japan was in line.
Hermes has outperformed other luxury groups as the French brand benefited from resilient demand even as growth across much of the industry slowed. Its limited production capacity creates a backlog of orders for its prized handbags and greater pricing power.
Hermes is “in a league of their own,” Thomas Chauvet, an analyst at Citigroup, wrote in a note. The group benefits from a “high share of loyal, higher-end demographics,” he added.
The shares rose as much as 3.3% in Paris on Tuesday, and have gained about 19% this year. Hermes has a market value of €181 billion ($193 billion), more than three times that of Gucci owner Kering SA.
Sales in China, Taiwan, Hong Kong and Macau have been “robust,” and compare to a particularly strong quarter last year, Chief Financial Officer Eric du Halgouet told reporters on a call. The company doesn’t foresee for now a return to Europe of Chinese tourists, who are opting to travel regionally.
“Despite an uncertain global environment, we remain confident,” for 2023, he said.
Hermes hasn’t seen a change in shopping trends as of early October, but remains attentive to the potential impact on tourism of recent geopolitical events, he added. France earlier this month moved into the highest level of terrorism alert after the fatal stabbing of a teacher.
The strength of the US performance was buoyed in particular by the label’s Madison Avenue store, which opened a year ago, he said.
Hermes has applied small price hikes to its watches and jewelry products during the course of the year, following the usual increases the company applies early in the year, the executive said, according to Bloomberg.
Luxury group LVMH — whose brands include Louis Vuitton and Christian Dior — reported disappointing quarterly sales earlier this month as shoppers reined in spending on high-end Cognac and costly handbags. Kering will report sales figures later on Tuesday in Paris.
