Hermes reported strong sales growth for the third quarter on Tuesday morning, leaving it the outlier in what seems to have become a declining global luxury sector.
Despite peers such as Louis Vuitton Moet Hennessey pointing to a pinch on the sector from wider economic turmoil, Hermes announced sales had jumped by 15.6% to €3.4 billion on a constant currency basis during the three months to September.
These were particularly propped up in the US, but growth came across all of Hermes’ regions - including in China and Asia.
“Another quarter of industry-beating growth is likely to position Hermes as an interesting play in an out-of-favour sector,” Citigroup analysts said following the results.
Analysts had tipped that demand would “normalise” across the sector over the third quarter as economic woes hit, with slowing sales growth and an earnings miss at LVMH seemingly confirming this.
However, the positive results from Hermes prove demand is still there for the most sought-after brands, analysts said on Tuesday.
“It all shows the value of brands positioned at the very top end of their segments,” Hargreaves Lansdown’s Steve Clayton said, pointing to Hermes’ Birkin handbags.
interactive investor analyst Victoria Scholar echoed the sentiment, suggesting that price rises of roughly 7% over the year only seemed to make the firm’s luxury offerings more appealing to some.
“Hermes is managing to defy the economic headwinds thanks to price hikes which don’t appear to be weighing on customer demand,” she said.
“Unlike most goods where demand softens as prices rise, the luxurious allure of a Hermes bag, with some costing over US$10,000, only seems to improve as prices increase.”
Citi tipped the results could prompt higher estimates for Hermes' full-year earnings which itself placed at €13.39 billion.
Whether strong sales continue into next year remains the key question though, Citi added, with Hermes’ reliance on product scarcity seemingly having worked so far.
Rival Kerring is due to release results later on Tuesday, offering further insight into the wider health of the luxury sector.