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Investing.com -- Shares of Luxury fashion giant Hermes (EPA:HRMS) fell 3.6% on Wednesday despite posting a 9% rise in second-quarter sales, pointing to continued strong demand from affluent shoppers despite recent price hikes and tariff headwinds, but also showing signs of challenges in the luxury market.
The maker of Birkin bags said Q2 revenue reached €3.9 billion ($4.5 billion) at constant exchange rates, broadly in line with expectations for a 10% increase, according to Visible Alpha consensus cited by UBS.
For the first half (H1) of 2025, group sales totaled €8.03 billion, while EBIT came in at €3.33 billion and earnings per share reached €21.39—both slightly below consensus estimates of €3.27 billion and €21.90 cited by Jefferies, respectively.
Hermes lifted global prices by 7% this year and applied an additional 5% increase in the U.S., where it plans to fully pass through the 15% tariffs agreed between the Trump administration and the EU. Executive chairman Axel Dumas said these adjustments should be enough to offset the tariff impact.
By geography, H1 sales were strongest in Japan, up 14.7%, followed by the Americas at 12.3%. Asia-Pacific excluding Japan grew more modestly, at 5.2%.
Leather Goods & Saddlery (LG&S) remained the key growth driver, rising 14.8% in the quarter, with a widening gap over non-leather segments.
According to Bernstein analysts, the continued strength of Hermès’ leather goods division is encouraging, but also highlights the ongoing challenges in the wider luxury market. "This is a sign the market is staying difficult," they said in a note.
"Investors will be debating the extent to which a gap between leather and non-leather divisions of c.1000bps in Q2 should be interpreted," Jefferies analyst James Grzinic commented.
"As is the case for all luxury players in the industry, today’s call (8am U.K. time) will be especially focused on demand in the early stages of Q3," he added.
Among other sectors, sales in the Watches segment declined 5.5% in H1, while Perfume and Beauty fell 7.2%.
The Other Hermes segment rose nearly 15%.
Looking ahead, Hermes reiterated its medium-term ambition of achieving strong revenue growth at constant exchange rates.