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Hermes sales soar despite cost-of-living crisis and China Covid restrictions

PARIS – Hermes International sales surged as luxury shoppers in China returned to stores after Covid-19 restrictions eased to snap up its Birkin and Kelly handbags.

Revenue rose 24 per cent to €3.1 billion (S$4.3 billion) in the third quarter, excluding currency swings, Hermes said Thursday, topping analysts’ estimates of a gain of 15 per cent. Leather goods and saddlery, the biggest unit, grew 13 per cent.

“Sales in Greater China picked up strongly, despite temporary closures due to sanitary measures,” Hermes said in a statement. Revenue in the Asia-Pacific region, excluding Japan, climbed by a third.

The results provide more evidence that producers of luxury goods remain mostly immune to the squeeze on spending that other retailers and consumer-goods companies have faced from a worsening cost-of-living crisis. Hermes confirmed its medium-term goal for revenue growth, “despite the economic, geopolitical and monetary uncertainties around the world.”

LVMH, the owner of the Louis Vuitton and Christian Dior brands, last week reported better-than-expected sales of fashion and leather goods. The Paris-based giant benefitted from US shoppers who splurged on luxury goods in Europe, helped by the strong dollar, as did Hermes, according to chief financial officer Eric du Halgouet. He confirmed the luxury group plans to hike product prices worldwide between 5 per cent and 10 per cent in 2023, compared with 4 per cent in 2022.

Gucci-owner Kering will publish sales figures after the close of trading.

Hermes is considered one of the most exclusive brands in the luxury space, with production of its bags capped by capacity constraints. Sotheby’s last month sold its most expensive handbag ever, a crocodile-skin Hermes Kelly, for €352,800 at an auction in Paris. - BLOOMBERG

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