The French luxury group Hermès has defied the global downturn in the sector by reporting a significant increase in quarterly sales. The Paris-listed company, known for its silk scarves and Birkin handbags, saw sales rise by 11.3% to €3.7bn in the three months ending in September. This growth was in line with analysts’ forecasts, and Hermès’ shares rose by 2.33% in morning trading. In contrast, competitors such as LVMH and Kering have experienced declines in their share prices due to weakening consumer demand, particularly in China.
Despite the challenging environment, Hermès has performed well thanks to its focus on wealthy luxury consumers and high-demand products like handbags with long waiting lists. The company’s sales growth in Europe, excluding France, was particularly strong, driven by textiles, leather goods, and perfume. However, sales of jewellery and watches, which account for 40% of the brand’s revenue, fell short of expectations.
Looking ahead, Hermès remains confident in its medium-term revenue growth despite geopolitical uncertainties. The company continues to invest in manufacturing, marketing, and IT, as well as providing salary increases and a free share plan for staff. Compared to its French rivals LVMH and Kering, Hermès has maintained a strong position in the market.
Analysts believe that Hermès and Italy’s Prada Group will continue to stand out in the luxury sector. Hermès’ defensive business model and solid financial performance have earned it a valuation premium compared to its competitors. The company’s focus on domestic consumers in Japan has also shielded it from the impact of the slowdown in Chinese tourism.
In contrast, Kering has issued profit warnings throughout 2024, with Gucci sales declining significantly in the third quarter. The company has not provided forecasts for improvement in the near future, leading to a decrease in its operating profit for the full year.