Hermès defies downturn in luxury shopping to outshine rivals

The Birkin bag-maker Hermès has defied the downturn in the luxury shopping sector to post a stellar rise in third-quarter sales as it continues to outshine rivals hit hard by China’s slump.
The French company generated €3.7 billion (£3 billion) in revenue for the three months ending in September, an 11.3 per cent rise at constant exchange rates and slightly ahead of expectations.
The group said it was sticking with medium-term guidance for continued revenue growth despite global economic, geopolitical and monetary uncertainties.
“We see Hermès as the best current opportunity to protect the portfolio from a difficult second half, suffering from a global cyclical slowdown exacerbated by structural issues in China,” said Bernstein luxury goods analyst Luca Solca, noting that all divisions except watches had posted higher growth than expected.
Axel Dumas, executive chairman of Hermès International, said the “singularity” of its model, which relies on exclusivity with tight controls over production and stock, enabled it to continue recruitment and long-term investment.
Handbags like the coveted £10,000-plus Birkin model are affordable only for the wealthiest shoppers, who are typically immune to choppy economic conditions. It plans to open a new outlet in Beijing next year.
Sales in Asia, excluding Japan, grew by 7 per cent, while Europe excluding France saw an 18 per cent rise in sales, fuelled by local buyers and continued tourist spending. France recorded a 14 per cent increase, despite a slight dip in footfall due to the Olympic Games while sales in the American market continued to gain momentum, with a 13 per cent rise.
Hermès 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. Hermès shares closed up 1.07 per cent, or €22, at €2,083 in Paris.