Hermès’ Q1 2023 sales numbers evidence that its hallmark Birkins and Kellys certainly are not sitting around on shelves waiting for buyers. Handbag shoppers worldwide still covet these items, sending sales up 23% (at constant exchange rates) for the first three months of this year.
According to Axel Dumas, Executive Chairman of Hermès, in the Quarterly Report:
“The first quarter of 2023 is aligned with the good results of 2022 and reflects the success met by our collections all over the world, driven by the loyalty of our customers.”
Which Hermès Sector Had Greatest Growth
It’s no secret that to a large segment of luxury shoppers, Hermès remains the top name in leather goods, particularly handbags. The Leather Goods & Saddlery group remains the Maison’s largest, representing 42% of its sales for Q1 2023. As a point of comparison, it was 43% of the business for the same period last year.
For 2023 Q1, sales in this business line rose 19% at constant exchange rates. Despite larger than usual price increases early in this quarter, the increase is less than the overall growth (23%) seen by the brand. Likely it is due to production and supply constraints, as Hermès continues to bring on new production facilities. Just recently, it inaugurated its second workshop in Louviers, Frances, intended to create Kelly 25s and a new version of the Constance Mini. Another site is slated to open in Ardennes next month (May 2023)
Hermès’ Ready-to-Wear line continued to grow its sales, experiencing a jump of 34%. This follows a 32.5% increase in 2022 Q4 over the same time period of 2021. For this quarter, RTW represented 28% of Hermès sales, as compared to 26% a year earlier.
Sales in the much smaller line – Watches – rose 24%. The Other Products group, which includes Jewelry and Homewares, rose 28%. So yes, it’s safe to say we are all still keeping time and decorating à la Hermès.
Image courtesy @sonnetsofsilk
Was Greatest Growth in Asia, Americas, or France?
Are you surprised to learn that geographically Hermès home country, France, increased sales by the greatest percentage over Q1 2022? Up 28% Hermès attributes it, at least in part, to the increase in tourist traffic. The remainder of Europe saw sales grow 20%.
And sales in the Americas (which is more than just the United States) were up 24%. This is in contrast to just-announced LVMH results of 8% increase in the United States. At its earnings call, LVMH’s described a slowing in sales of Fashion & Leather items in the United States.
Apparently this is not the case for Hermès. Eric du Halgouet, Hermès’ Executive Vice President of Finance, told reporters that U.S. store traffic was up and continuing to be so this month.
However, in contemplating the regional successes, it’s important to remember that Asia is by far Hermès’ largest market. For Q1, sales there were 61% of overall sales (as compared to 62% in a year prior). So although growth percentages may be slightly lower, the numbers, overall sales in Asia are quite consequential.
In China (reported as Asia-Pacific excluding Japan), sales rose about 22%. Adding Japan’s 16% growth, the total Asia sales were plus 21%.
When considered with LVMH’s recent Q1 financial results, it appears that the luxury goods sector is not retrenching. Economic uncertainty, geopolitical fragility, and banking crises have not yet taken a serious toll in this area. Only time will tell.
Additional Hermès Considerations
Hermès’ popularity and demand continues to soar, with no signs of abating. There was little (if any) pushback to its imposed price hikes earlier in the quarter. Indeed, some speculated it was overdue.
With the advent of an additional leather workshop and the promise of another in short order, there are expectations of greater supply. Will that mean greater availability? And is that what Hermès really wants?
After all, Hermès, particularly as to certain handbags, is known for exclusivity: hard to obtain at a price point not affordable to all. Certainly the latter will remain true; few can afford to spend five figures on a bag. However, might owning a Birkin or Kelly (or several) be less special if anyone with money can get it easily. And would you still want it? Questions for Hermès and collectors to consider another day.
Are you surprised the continuing financial success of Hermès (and luxury market)? And are you hoping for it to be easier to get Hermès Birkins and Kellys? Let us know.
Love, PurseBop
XO
Read:
Hermès Financials Soared in 2022: Employees Receive €4000 Bonus
LVMH Revenues Soar 17% in Q1 of 2023 Due to Asia and Fashion & Leather Goods
Hermès. Opens (Another) Leather Goods Workshop and Seeks Artisans
Part I: Hermès Unveils 6 New Handbags for Fall/Winter 2023
Part II: New Hermès Bags, Ready-to-Wear and SLGs to Expect in Fall/Winter 2023
Updated: April 14th, 2023
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