Hermès bucks US luxury slowdown as sales soar 22%

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French luxury group Hermès has defied an industry-wide slowdown in the US, posting 22 per cent growth in sales across all markets in the first half of the year.

Overall revenues soared to €6.7bn for the first half, from €5.5bn in the same period last year, the Paris-based company said on Friday. Operating profit surged 28 per cent to €2.9bn.

Sales in France advanced 24 per cent, while they grew 20 per cent in the Americas, a market dominated by the US.

Hermès’ performance comes as investors have started worrying that the luxury sector’s record growth in recent years is abating, led by a slowdown in the US. LVMH shares have dipped since Bernard Arnault’s conglomerate reported markedly slower growth in the US this week. Switzerland-based Richemont’s stock plunged as much as 9 per cent last week after reporting underwhelming quarterly sales in the US.

“Hermès blows the whole luxury goods industry out of the water,” wrote Luca Solca at Bernstein. “The power of the Hermès brand is unquestionable [and] long waiting lists smooth out any short-term demand hiccups.”

The French brand benefits from catering for high-end consumers, who are more resilient to economic trends, Solca said.

Hermès shares were up 4 per cent in Paris on Friday, giving the company a market value of €212bn.

“There appears to be some decorrelation between Hermès and other companies who have reported results,” said Axel Dumas, executive chair of the group, which is controlled by his family. “We don’t see any drop in the attractiveness of any of our products in United States, I think it’s still a territory with many opportunities.”

The maker of the Birkin bag and silk scarves put its resilience down to its strategy of targeting customers where they live, in contrast to some competitors that have sought to capitalise on high spending on luxury items by tourists while abroad.

In China, Hermès was less affected by Covid lockdowns than other luxury groups as clients continued to buy locally. Sales in Asia excluding Japan, which is dominated by China, climbed 24 per cent in the first half.

“The main source of growth remains the local customer in our countries,” said Dumas, pointing out that this was a trend that helped to support the company through Covid when travel was restricted, especially in China.

Dumas added that, although in France the average amount spent is greater among international customers, Hermès has many more local French clients, which forms the base of its business.

While some more aspirational customers in smaller US cities appeared to be under more pressure than previously, big stores in urban hubs such as New York and Los Angeles performed well, Dumas said.