Hermès, the renowned luxury fashion brand, has exceeded market expectations with its strong sales growth in the third quarter. Despite facing a slower recovery from the impact of the COVID-19 pandemic, the company recorded a remarkable 31% increase in sales during this period. Analysts had predicted a growth rate of 21% for the French group’s comparable revenues in the three months leading up to September.
At the end of the quarter, Hermès achieved revenues of €2.37 billion ($2.76 billion), surpassing pre-pandemic levels by 40%. This remarkable rebound indicates a resurgence in the luxury goods industry as lockdowns ease and consumer confidence in high-end products is restored. Nevertheless, the industry continues to face challenges, such as limited revenue from shopping by traveling tourists and the resurgence of COVID-19 cases in Asia, which impact growth.
Despite concerns about a potential slowdown in China, Hermès’ largest market, the company’s finance chief, Eric du Halgouët, remains optimistic. He highlighted that store traffic, customer conversion rates, and average spending per customer have all witnessed positive growth in the past quarter. Furthermore, he credited online sales for attracting new customers to their physical stores. Chinese leaders’ plans to address wealth gaps and implement property taxes have not had a significant impact on Hermès’ business in China thus far.
Within Hermès, multiple divisions experienced robust growth. The Leather Goods and Saddlery division witnessed a 46% increase in sales over the past year and an impressive 27% increase over the past two years. The Ready-to-wear and Accessories business line also exhibited dynamic growth, with a remarkable 71% increase over the same two-year period. The Silk and Textiles division performed well too, achieving a 63% boost over two years. Additionally, the Perfume and Beauty division experienced a 51% increase over the same two-year period. This growth was primarily driven by the successful launch of new products and the expansion of the Beauty line, including the introduction of handcare products in China.
Overall, Hermès’ exceptional sales performance in the third quarter underscores the resilience of the luxury goods industry. The company’s adaptability to changing market conditions and its focus on online sales channels have played significant roles in driving growth and attracting new customers. As the world continues to grapple with the ongoing pandemic, luxury brands like Hermès are demonstrating their ability to thrive and cater to the evolving demands of consumers.
Useful Links:
– Business of Fashion
– Luxury Daily
