Uber stock surges after Nvidia partnership announcement
Investing.com -- Hermes reported third-quarter sales that were broadly in line with expectations, pointing to resilient demand for top-tier luxury goods even as broader consumer spending softens.
The French fashion house posted revenue of 3.88 billion euros ($4.50 billion) for the quarter ended Sept. 30, up 9.6% year-on-year at constant exchange rates and slightly above the 9% growth recorded in the prior quarter. Analysts surveyed by Visible Alpha had expected 3.90 billion euros.
But the company pointed to a marginal recovery in China, which accounts for about a third of global luxury demand, echoing recent signs of stabilization from LVMH and L’Oreal.
“One could note a very slight improvement in the third quarter,” finance chief Eric de Halgouet told journalists, citing firmer real estate prices in major cities and stronger stock markets.
Shares fell 2.5% in Paris trading after the update.
In the U.S., store traffic picked up, with growth evenly distributed across regions, and Hermes plans to continue investing there following the opening of a new boutique in Nashville.
Jefferies analysts said Hermes’ 9.6% sales growth in Q3 "will likely generate a debate amongst investors."
"This at a time when the shares have suffered a major sector relative derating (of over 50% since mid-April), with markets increasingly enthused about a reboot of broader industry demand reinterpreting the consistency of RMS’ share gains as unexciting.
The group reaffirmed its medium-term target for revenue growth at constant exchange rates but cautioned that global conditions remain shaped by economic, geopolitical, and monetary uncertainty.
Sales of leather goods—including its Birkin, Kelly, and Constance handbags—rose 13.3% in Q3, accounting for roughly half of total revenue. The growth was below the 14% consensus cited by RBC Capital Markets.
"We believe shares might be under pressure near term, given the slight miss in key Leather Goods division, and elevated buy-side expectations reflecting more positive sentiment in luxury recently," RBC analyst Piral Dadhania wrote.
Sales of clothing, silk accessories, and jewelry also posted gains.