Luxury goods demand in China rises as Hermes’s sales soar
As of the first quarter of 2023, Hermes’ sales rose 23% to €3.3bln. Market growth in Asia and Europe contributed to this.
Birkin bag makers claimed strong momentum in China contributed to the growth of revenue in Asia (excluding Japan) by 23% year over year.
In the first quarter, sales in Asia totaled over €2bln, accounting for just under two-thirds of the group’s total sales.
Victoria Scholar at Interactive Investor noted that Beijing’s loosening anti-covid measures is providing a tailwind to Hermes sales.
Additionally, the resumption of international travel by Chinese citizens boosted sales in other countries.
According to Hermes’ finance chief, Eric du Halgouet, the US business continues to perform well, with a favorable footfall.
LVMH, with 8% growth in US revenues, trailed the Paris-based brand by 19% in the Americas.
Fashion, leather goods, and jewelry sales in the US fell by 17 percent last year, according to Louis Vuitton Moet Hennessy Corporation, controlled by Bernard Arnaut, the world’s richest man.
A 7% price hike to mitigate inflation may have contributed to Hermes’ growth in the US. While observing the wider economy of the country, it remains “vigilant.”
In the rare and fortunate situation of raising its prices, Hermes can boost both its allure and demand. According to Scholar, most goods suffer less demand as prices rise, as opposed to most goods that suffer less demand as prices rise.
“We are confident about the future” and have an “ambitious goal” for the company in 2023.
On Friday, shares of the company opened at €1,955, up about 1%.