Hermes defies luxury sector slowdown with sales surge in China

Hermes saw Chinese buyers snap up its luxury products as bag maker Kelly showed its resilience amid a broader slowdown in demand for the sector.

Sales at constant exchange rates rose 17% to €3.8 billion ($4.1 billion) in the first quarter, Hermes International SCA said on Thursday. This was more than analysts expected.

Hermes tends to target its most affluent customers, making it more resilient in a challenging luxury goods market. The prosperity is in stark contrast to the challenges at Kering SA, which is trying to turn around its biggest brand, Gucci; efforts that take time to bear fruit.

Hermes’ sales in the key Asia-Pacific market excluding Japan rose 14% to €1.92 billion in the period, while its crucial leather goods and saddlery division grew 20%, both better than forecast .

Hermes saw weaker traffic in Greater China in March after the Chinese New Year, with a “slight erosion” of customers buying more affordable products such as silk scarves. But that was offset by shoppers spending money on pricier leather, ready-to-wear and jewelry items, Chief Financial Officer Eric du Halgouet told reporters on a call.

Hermes’ perfume, beauty and silk divisions grew by 4.3% and 7.9% respectively during the quarter.

Shares in Hermes are up 23% so far this year in Paris, outpacing LVMH Moet Hennessy Louis Vuitton SE’s 9% rise and Kering’s 18% decline.