The "One and Only" in Luxury Goods: Hermès' third-quarter sales increased by 11%, with strong demand for platinum bags

Breaking the overall downward trend in the luxury goods market, Hermès exceeded expectations in the third quarter with strong demand for platinum bags.

On Thursday, October 24th, Hermès announced that revenue for the third quarter was €3.7 billion (USD 3.99 billion), with sales increasing by 11.3% at fixed exchange rates, slightly higher than analysts' expected 11%.

By region, Hermès exceeded expectations in sales in Europe, Japan, and the Americas. By business segment, except for a 18% decline in the watch department, all other business segments saw growth in sales.

In contrast to Hermès, performance reports from other major luxury goods groups were disappointing as consumers in some markets reduced their consumption of luxury goods.

LVMH's third-quarter financial report showed that all major sectors underperformed, with quarterly revenue declining for the first time since the pandemic, and core sector sales experiencing the "first drop in four years"; Gucci, a luxury brand under Kering Group, saw a 25% year-on-year decline in sales in the third quarter, and Kering Group expects the collective profit for the entire group to decline by over 45% year-on-year in 2024.

Amid a slowdown in demand for high-end goods, Hermès outperformed most competitors. Analysts believe this is because Hermès mainly serves the world's wealthiest individuals, who are hardly affected by a sluggish consumption environment. Additionally, Hermès enjoys strong pricing power and can decide on waiting lists for popular bags.

However, the overall slowdown in the luxury goods industry and global economic uncertainty have indeed affected Hermès. Earlier this year, Hermès executives mentioned that there was a slight decrease in traffic from aspirational consumer groups, which impacted the sales of accessories such as scarves.

Axel Dumas, Executive Chairman of Hermès, stated: "In a more uncertain economic and geopolitical context, I would like to thank all employees for their strong performance in the third quarter, as well as our loyal customers. Due to the uniqueness of our model, Hermès continues to recruit and make long-term investments."

Yesterday, Hermès' US stock closed down by 0.67% at USD 221.75 per share. Over the past year, Hermès has risen by over 20%.