Hermes reports strong quarter, though currency a drag

Luxury fashion brand Hermès announced strong quarterly results on Tuesday, with consolidated revenue reaching €10.06bn by the end of September, marking a 22% increase at constant exchange rates and a 17% increase at current exchange rates compared to the same period last year.

In the third quarter alone, the French firm said sales soared to €3.37bn, rising by 16% at constant exchange rates, despite a challenging comparison base in Asia.

Executive chairman Axel Dumas put the performance down to the appeal of its collections, with sustained momentum in Asia and the Americas.

“In an uncertain global environment, we are reinforcing our investments and our teams to support growth,” Dumas said.

Sales across geographical areas demonstrated impressive growth rates, all exceeding 20%.

Asia, excluding Japan, saw a 21% increase, with solid sales in Greater China, Singapore, Thailand, Australia, and Korea.

Japan witnessed a 25% growth rate, while the Americas rose at 20%.

Europe, excluding France, and France both posted a robust increase of 20% and 22%, respectively.

Hermès also reported strong performance across its business lines, with the leather goods and saddlery business line recording a 19% growth rate, driven by high demand.

The ready-to-wear and accessories business line achieved a remarkable 29% growth rate thanks to the success of several collections.

Its silk and textiles business line saw a 17% increase, supported by exceptional materials and expanded production capacity.

Perfume and beauty reported an 8% increase, driven by successful product launches, while the watches business line confirmed a 24% growth rate, and other Hermès business lines expanded by 26%, particularly in homeware and jewellery.

Recruitment accelerated across all business lines in the third quarter, while Hermès signed agreements to support caregivers and work-life balance and introduced a free share plan in July to involve employees globally in the company’s success.

The board noted that currency fluctuations had a negative impact of €420m on revenue by the end of September.

Additionally, Hermès International redeemed 38,812 shares for €72m during the first nine months of the year, excluding transactions within the liquidity contract framework.

“The group continues the year 2023 with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients,” Hermes said in its statement.

“In the medium term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates.

“Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, maintaining control over know-how and singular communication.”

At 1249 CEST (1149 BST), shares in Hermes International were up 2.26% in Paris at €1,719.20.

Reporting by Josh White for Sharecast.com.