PARIS – Hermès International said revenues jumped 31.5 percent year-on-year in the third quarter, helped by a “remarkable” performance in Greater China.
The French luxury firm posted revenues of 2.37 billion euros in the three months to Sept. 30, up 40.3 percent at constant exchange rates compared with 2019, considered a more reliable benchmark due to the disruption caused by the coronavirus pandemic last year.
This represented an increase of 31.2 percent versus 2020, beating a consensus of analyst estimates, which had called for a 23.8 percent rise in like-for-like sales. The better-than-expected growth rates confirmed Hermès as one of the top-performing luxury brands this year, despite a resurgence in coronavirus cases in Asia over the summer.
“This report confirms our understanding that the strongest are getting stronger,” Luca Solca, analyst at Bernstein, said in a research note. Kering earlier this week reported that sales rose 12.2 percent at constant exchange rates compared with 2020, while sector leader LVMH Moët Hennessy Louis Vuitton was up 20 percent year-on-year.
“The performance of the third quarter reflects an atypical year, during which we continue our strategic investments and accelerate job creations,” Axel Dumas, executive chairman of Hermès, said in a statement.
“In a world that remains unstable, the balance between our 16 métiers and between our locations around the world, allows us to move forward with optimism and caution, while continuing to create beautiful, high quality, sustainable objects,” he added.
The group said that despite a high comparison base in the fourth quarter, it is approaching the end of the year with “confidence.”
However, in a conference call with analysts, it cautioned that that its second-half operating profit margin should be much lower than the 40.7 percent recorded in the first six months of the year, due to foreign exchange headwinds, higher employee costs and a lower contribution from leather goods, Barclays reported.
Activity in the third quarter was sustained in Asia, up 23.4 percent at constant exchange rates thanks to the strong performance in Greater China and other countries in the region, despite new restrictions in Australia, Thailand and Malaysia, the company said.
Sales accelerated in the Americas, which posted a 48.4 percent jump in revenues, while France recorded a 46.7 percent increase. The rest of Europe, meanwhile, was up 36.4 percent.
The key leather goods and saddlery division saw organic sales rise 22.2 percent during the period, driven by sustained demand and significant deliveries during the quarter. Hermès opened a new leather goods workshop near Bordeaux in September, and several other production sites are in the works.
Ready-to-wear and accessories were up 39.4 percent, watches 53.7 percent, and silk and textiles 49.2 percent. Other sectors, a division that includes jewelry and home wares, recorded a 47.5 percent increase in comparable sales, and the perfume and beauty division was up 32.5 percent, with the launch of beauty in China in July.
Hermès continued to expand its retail network with openings and extensions, and reported an increase in online sales worldwide. In the last month alone, it has reopened its store at the Istinye Park mall in Istanbul, and unveiled new boutiques at the Aventura Mall in Fla., United States, and in Shenzhen, China.
Wholesale activities remained penalized particularly by the absence of international travelers, which has heavily impacted travel retail.
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