Hermès makes Q3 progress in China, US; says leather goods and RTW are strong

Hermès had some good news on Wednesday as it reported a slight sales improvement in key market China and said US shoppers continued to buy its ultra-luxury products in large numbers.

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It meant that Q3 sales rose 9.6% at constant exchange rates (or 4.8% reported) rather than the 9.3% some analysts had predicted, reaching €3.881 billion.

Importantly, the leather goods sales that account for almost half of its total rose 13.3% at constant rates, but that was very slightly below estimates.

Axel Dumas, executive chairman of Hermès, said: “In the third quarter, Hermès is maintaining its course, thanks to solid growth that reflects the strength of our model. We remain focused on navigating uncertainties, thanks to the loyalty of our customers and the commitment of our employees.”

“One could note a very slight improvement in the third quarter” in Greater China, finance chief Eric de Halgouet added on a conference call with journalists, saying better news on the local stock market and stable property prices in large cities would have helped.

He also said US strength was seen across categories and store footfall made steady progress.

The brand increased prices in the US back in May as tariffs were introduced, but it hasn’t raised its prices since and US sales were up 14.1% in the quarter at constant exchange rates, or 7.2% at actual rates at €714 million.

In France, Q3 sales rose 10.4% to €403 million, while the rest of Europe saw a constant rate increase of 10.2% and a reported increase of 8.3% to €633 million.

Sales in Japan were up 13.8% at constant rates and 8% reported, reaching €389 million and the rest of Asia Pacific was up 6.2% constant but only 0.3% reported at €1.589 billion. The Middle East increased 11.7% constant and 6.1% reported to €154 million.

We’ve already mentioned the constant exchange rate increase for leather goods and saddlery (13.3%) and the division rose 8.1% on a reported basis to €1.7 billion. Ready to wear and accessories increased 6.6% constant and 2% reported to reach €1.157 billion. Silk and textiles increased 4.1% constant but actually dipped 0.7% reported to €209 million. Watches (which are down for the year as a whole) in Q3 rose 8.8% constant and 4% reported to €131 million. But perfume and beauty was down 7.2% constant and 8.6% reported at €118 million.

The company said that the leather goods division was supported by strong demand for iconic products as well as new collections, while ready to wear and accessories saw well received collections. Perfume and beauty was dented by tough comparisons due to a major launch in the previous year.