Hermès continues to bounce back as sales beat forecasts

Luxury giant Hermès said its sales grew by 31% in the third quarter, beating market expectations even as the pace of the rebound from the fallout of the coronavirus pandemic slowed down from the previous three months.

Analysts had expected comparable revenues at the French group, which strip out currency fluctuations, to grow by 21% in the three months to September, according to a consensus cited by UBS.

Revenues at the end of the quarter stood at €2.37 billion ($2.76 billion), some 40% above their pre-pandemic, 2019 levels, the company said on Thursday.

Luxury goods companies have recovered sharply from the fallout of the health emergency, lifted by strong demand for high-end wares as lockdowns ease across the world and consumers return to socialising. 

However shopping by travelling tourists — a key source of revenue for the sector — remains muted, and a resurgence of Covid-19 cases in Asia during the summer has weighed on growth. 

Finance chief Eric du Halgouët shrugged off concerns about a slowdown in China, the industry's biggest market, saying store traffic, the percentage of people leaving its shops with a purchase and the average sum spent in its stores were all on the rise in the past quarter.

He said the group had seen no impact so far from comments by Chinese leaders indicating plans to reduce wealth gaps in the country, including through property taxes.

“We have observed in China in recent quarters an acceleration of store traffic, an improvement in conversion rates and an increase in average baskets,” he told reporters. “This new clientele is brought, in part, by online sales, which have contributed strongly to drawing this new clientele into our stores.”

The company said sales in the Leather Goods and Saddlery division (+46% over one year and +27% over two years) benefited from significant deliveries and sustained demand. 

The Ready-to-wear and Accessories business line (+71% and +43% over two years) continued its dynamic growth and the Silk and Textiles business line (+63% and +10% over two years) performed well too.

And Perfume and Beauty (+51% and +18% over two years) benefited from the successful launches of the H24 Perfume for Men and Twilly Eau Ginger, from the development of the Beauty line, with the sustainable, refillable limited edition of Rouge Hermès Éclat de la nuit. After the launch of Beauty in China in July, the unit continues its drive to expand with handcare products this autumn.

Additional reporting by Sandra Halliday