Thanks to strong demand from Chinese consumers, Hermès's performance showed resilience in the face of a general slowdown in demand in the luxury goods industry.
The Zhitong Finance App learned that thanks to strong demand from Chinese consumers, Hermès's performance showed resilience in the face of a general slowdown in demand in the luxury goods industry. Hermes said on Thursday that at a fixed exchange rate, the company's first-quarter sales increased 17% to 3.8 billion euros ($4.1 billion), exceeding analysts' expectations of a 13% increase.
Bernstein's analyst commented: “Hermès today handed over yet another result that surpassed market expectations.”
Boosted by this, the stock rose 1.3% in the Paris stock market at one point, but then regained its gains. Since this year, the stock has accumulated a cumulative increase of nearly a quarter, beating rival LVMH and Gucci's parent company Kering Group.
Hermès products are often favored by the most affluent customers, making them more resilient in the challenging luxury market. The financial report also provides a stark contrast to the challenges faced by the company and Kering Group. Currently, Kering is trying to reverse the decline of its biggest brand, Gucci, but these efforts may take time to bear fruit.
In the first quarter, Hermes' revenue in major Asia-Pacific markets, excluding Japan, increased 14% to 1.92 billion euros, and sales in all other regions achieved double-digit growth.
Chief Financial Officer Eric du Halgouet said that after the Chinese New Year holiday, Hermès' passenger traffic in Greater China declined in March, and there was a “slight decrease” in the number of customers buying more affordable products such as scarves. But he added that strong consumer demand for its more expensive leather, apparel, and jewellery products made up for this loss.
“Our more affluent customers continue to visit our stores,” du Halgouet said, pointing to an increase in average spending.
By sector, Hermes' key leather goods and saddleware division grew 20%. The perfume, beauty, and silk divisions also grew by 4.3% and 7.9%, respectively, in the first quarter.
According to information, during the pandemic, Chanel, LVMH's Dior, and Louis Vuitton all stepped up their efforts to increase the price of handbags, while Hermès maintained restraint during this period and only began to increase prices sharply last year.
Analyst Bernstein added that this year's 8% price increase will provide Hermès with greater impetus.