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Diving overview:
Hermès bucked broader trends in the luxury industry with third-quarter report Consolidated sales increased 10% year-on-year to 3.7 billion eurosThursday’s release equates to about $4 billion.
Overall sales improved in all regions, but Asia Pacific ex-Japan saw a slowdown in the third quarter, growing 0.6% year over year. The region’s growth rate in the second quarter was 4.4%.
On a divisional basis, revenues increased in all divisions except for the Watches division, which is one of the company’s smallest divisions and decreased by 18.9% to €126 million in the quarter. By contrast, the company’s largest division, leather goods and harness, grew 12.7% to $1.6 billion in the third quarter.
Dive Insight:
of Luxury goods companies’ profits slow down include LVMH, Zegna, ferragamo and kering Yanmei Tan, an analyst at research firm Third Bridge, said the exclusivity of leather products has not affected Hermès, which is “more dependent on VIP customers” than many other luxury brands. said.
“Each Hermès store has the freedom to select its own inventory, making each store unique,” Tan said in an emailed comment. “This personalized approach creates a shopping experience like no other and keeps our VIP clients loyal and engaged with our brand.”
Hermès Chairman Axel Dumas credited customer loyalty to the brand as a factor in the company’s strong quarterly performance.
“I would like to thank all of our employees and our customers for their loyalty and our strong performance in the third quarter, despite heightened economic and geopolitical uncertainty,” Dumas said in a statement. “Thanks to the specificity of the model, Hermès continues to recruit, long term investment. ”
For the nine months to September 30, the company’s revenue rose 11% to €11.2 billion, with solid growth reported in all regions.
Over the past nine months, Asia ex-Japan grew 4.8%, supported by strong sales in South Korea, Singapore, Australia and Thailand, the company said. Third-quarter sales in the region were affected by weaker traffic in China following the Lunar New Year and higher year-over-year growth compared to 2023.
Japan grew by 18.5% in the third quarter, with an overall 12.1% year-over-year increase in the first nine months of 2024.
The company said growth in the Americas, France, and Europe outside France was also stable for both the quarter and year-to-date, “despite a slight slowdown in foot traffic at our Paris store due to the Olympics.” .
“Customers still want luxury goods, but they are more careful about what they buy and which brands they choose,” Tan said. “Many customers recognize that Hermès products are a good investment because they tend to retain high value over time.”
He also pointed out that while leather products are the company’s core category, demand for non-leather categories such as ready-to-wear and accessories is rapidly increasing.
“This growth is driven by fashion trends and increased purchases by women and young consumers,” said Tan.
“Despite the economic, geopolitical and financial uncertainties around the world, the Group confirms its ambitious goal of increasing revenue at constant exchange rates,” Hermès said in its outlook. said.
