Last time we checked in on Hermes’s financial numbers CEO Axel Dumas had revised his overall sales growth estimate for 2016 from 8% to “slightly below 8%” (Read: Hermes Sales Decline Despite Ambitious Goals). Though it wouldn’t raise an eyebrow in daily life that kind of a statement means a lot to financial markets. When a company with such a consistent track record of beating sales estimates went public with that news many were stuck wondering if maybe things were actually worse than they seemed. After all, the rest of the luxury market was tanking at the time (Read: Luxury 2016 – The Year of Struggle).
But it appears Mr. Dumas knows his company well…or maybe he was setting expectations below a level he knew they could beat. Either way, last Thursday Hermes released new financials and revenue came in at $1.4 billion, beating estimates. Overall, sales are up 7.7% through September 2016 which is right in line with their revised estimate from the summer. Sales from the Asia-Pacific region, which includes China and Japan, were up a whopping 14%, the quickest growth in over two years.
Long Lines of Customers Outside of Hermes in Hong Kong. Photo Courtesy: WSJ.
This mirrors what’s happening across the industry. While Western luxury consumption markets continue to struggle, Hermes competitors LVMH and Gucci also reported higher than expected earnings from China. Dumas sees the Chinese market strengthening and there are growing signs domestic consumption is becoming more important for the luxury sector than tourist sales in Europe or the Americas. After the terrorist attacks in France and Brussels and the UK’s vote to leave the EU, the European market remains in a state of severe uncertainty – Hermes revenue was down 0.9% in France, badly missing the 3% target. This means we should expect to see even more emphasis on the Asian market. Hermes is already revamping their stores, but we wonder what other brands might try.
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Stay tuned for year-end numbers in a few months and if you’re a shopper in Asia tell us about your recent experiences on BopTalk!
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Updated: May 22nd, 2017
Comments
1 Responses to “Hermes Sales Steadily Rise Due to Growth in China”
I really wouldn’t worry for Hermès…The super rich or should I say billionaires are still billionaires even if the economy had them loose a few of those billions and tax privileges keeps them well comfortable, millionaires also and so on… middle class is hurting really bad and others even more, this is not bitter by all means, just realistic ????????..