Hermès Q2 Sales Surge 13.3%, Beating Expectations

Hermès reported a 13.3% increase in sales at constant exchange rates for the second quarter, reaching €3.7 billion, surpassing analysts' expectations of 11.5%. This growth was driven by strong performances in Europe (excluding France) and Japan, with sales up 18% and 19.5% respectively. The Asia Pacific region (excluding Japan) saw a 5.5% increase, while sales in the US rose 13%.

Despite broader market struggles, Hermès has maintained its appeal in China. Executive Chairman Axel Dumas attributed this to the sophistication of the Chinese clientele, who are seeking high-quality products without prominent logos.

By product category, ready-to-wear and accessories grew by 15.1%, leather goods and saddlery by 17.9%, and other sectors including jewellery and home products by 13%. Perfume and beauty saw a 5.6% increase. However, watches and silk and textiles declined by 4.9% and 5.6%, respectively. Dumas noted that pressure among aspirational customers contributed to these declines but expressed optimism about the future of the watch segment following the successful launch of the Hermès Cut model.

Hermès' performance stands out against other luxury brands. Kering’s Gucci saw a 19% sales drop, LVMH's fashion and leather goods division reported a 1% increase, and Richemont's sales rose by 1%. Burberry's retail sales fell 20%, Hugo Boss reported a 1% sales decrease, and Moncler Group’s sales increased by 8%.

Regarding the upcoming Olympics in France, Dumas acknowledged a potential pullback in Paris stores but emphasised the brand's global reach. "Our experience with the Olympics is that it’s not the best moment for us. We expect clients who won't be in Paris to be elsewhere," he said.

Éric du Halgouët, Executive VP of Finance, highlighted the group's strong financial performance, noting that sales doubled and net income tripled between 2019 and 2023. Hermès achieved an EBIT margin of 42% in the first half, the highest in the industry.

“We start the second half of the year with confidence and humility, proud of our know-how and creation,” concluded Dumas.