Hermes Sales Grow Most in Four Years, Quelling China Jitters

(Bloomberg) -- Hermes International reported its fastest quarterly sales growth in more than four years, buoyed by demand from Chinese consumers, another sign that the world’s largest luxury market is holding up.

The French maker of the famed Birkin bag reported sales growth of 12 percent at constant exchange rates Thursday, beating analysts’ estimates. The stock, which has gained 27 percent this year, briefly touched a record in Paris trading Thursday and then ceded those gains.

“This is a rock solid start to the year,” wrote Rogerio Fujimori, an analyst at RBC Europe.

Hermes is stepping up into a higher gear as China’s economy rebounds. That’s good news for the maker of $1,250 Epsom calfskin mobile-phone cases and $1,675 beach pants. Concern had been rising since the end of last year that wealthy Chinese consumers were pulling back on spending, though recent results from luxury rivals LVMH Moet Hennessy Louis Vuitton and Kering SA indicate that hasn’t happened yet.

Hermes said its growth rate in greater China exceeded 10 percent. Luxury-goods makers are becoming increasingly more dependent on that country as European markets like France decline in relative importance. Hermes got 13 percent of its revenue from its home market last year, down from 20 percent a decade earlier.

The Birkin bag maker showed weakness in France in the first quarter, with sales there rising only 1 percent as Yellow-Vest protests disrupted luxury shopping.

LVMH set the bar high when it reported 15 percent growth in its fashion and leather-goods business earlier this month. Kering also said sales of its star Gucci brand rose 20 percent in the quarter.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Marthe Fourcade

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