Hermès Surges Ahead of Luxury Sector with 28 Percent Q2 Sales Leap

Hermès Surges Ahead of Luxury Sector with 28 Percent Q2 Sales Leap

Hermès Records Impressive Double-Digit Growth in the U.S. Market, Outperforming LVMH and Richemont

Hermès International has demonstrated a remarkable sales growth of 28 percent at constant currency in the second quarter, outpacing its competitors in the luxury sector. The brand’s success can be attributed to its focus on loyalty, understated luxury, and a diverse global presence, even in the face of a U.S. luxury slowdown and economic uncertainties.

Axel Dumas, the executive chair of Hermès, highlighted the company’s commitment to its artisans and traditional French craftsmanship.

During tough financial times there’s a flight to quality, and possibly we reap some benefits from that.

People were somewhat anxious…and Hermès is recognized for its quality regardless of other people’s price positioning.

– Axel Dumas, Hermès executive chair

The growth in sales was particularly impressive in the Americas, where sales surged by 20 percent in the first half, surpassing its competitors. In contrast, other luxury companies such as Compagnie Financière Richemont and LVMH Moët Hennessy Louis Vuitton experienced declines in sales, attributed to a slowdown in luxury spending by aspirational customers.

Hermès’ successful strategy includes a strong focus on young and aspirational consumers, particularly the growing middle class in Asia and the U.S. Despite a 3.5 percent price hike in the U.S. earlier in the year, demand remained unaffected, indicating the brand’s strong appeal.

The company’s local-first approach has been instrumental in driving sales, with stores in Los Angeles and New York performing exceptionally well. Moreover, the expansion into smaller cities, such as Aspen and Naples in the U.S., and Chengdu in China, has further solidified its position in the luxury market.

Hermès’ growth has not been limited to its iconic handbags; shoes, jewelry, and ready-to-wear have also contributed significantly to the company’s success. The jewelry and homewares category saw a remarkable 36.1 percent growth, while ready-to-wear and silks experienced increases of 35.1 percent and 25.8 percent, respectively.

Looking ahead, Hermès plans to open four new leather goods production sites in the next four years to meet the strong demand for its handbags, including the highly sought-after Birkin and Kelly models.

In terms of regional performance, Asia saw an impressive sales increase of 32.3 percent in the second quarter, with China leading the way. The region rebounded with a strong Chinese New Year, and store reopenings have contributed to the positive trend. However, Chinese tourists are currently opting for intra-Asia tourism, and European sales have benefited from increased tourist flows from the Middle East, U.S., and Southeast Asia.

Hermès Macao

“The Chinese are not yet highly present in France, and only marginally in Europe,” executive vice president of finance Eric du Halgouët said.

Overall, Hermès’ outstanding second-quarter results exceeded analyst expectations and reaffirmed the brand’s leadership in the luxury sector. With a revenue of 3.32 billion euros in the three months to June 30 and a 25 percent increase in revenue for the first six months of 2023, Hermès continues to thrive and solidify its position as a frontrunner in the luxury market.