Hermès bags support from super-wealthy despite China slowdown

Design house Hermès has reported resilient sales figures despite a wider slowdown in the luxury market.

The Paris-based group, known for its celebrated Birkin bag and silk scarves, generated €3.7bn in revenue for the three months to the end of September.

That's an 11.3% year-on-year rise at constant exchange rates, meeting analysts' estimates.

"In a more uncertain economic and geopolitical context, I want to thank all employees for the robust third-quarter performance, and our customers for their loyalty," said Executive Chairman Axel Dumas.

"Thanks to the singularity of its model, Hermès is continuing its recruitments and long-term investments."

Hermès has fared better than competitors during a period of weak consumer demand for luxury products.

While household spending has been subdued in Europe over the past few years due to high interest rates and elevated inflation, the downturn has been largely driven by shoppers from China.

As China's economy has struggled to recover from the pandemic, this has dented demand for high-end products.

Kering, another Paris-based group who is responsible for Gucci, issued a dismal profit outlook late on Wednesday.

The firm said its full-year operating income would drop 46% below that of 2023 to about €2.5bn. That's its lowest level since 2016.

Luxury brands like LVMH and Burberry, meanwhile, are also struggling, with LVMH last week reporting a 3% decline in third-quarter sales.

In July, Burberry suspended its dividend and warned it expected to make a first-half loss. Its next set of financial results are due next month.

Analysts have attributed Hermès' resilience to the fact that it caters to very wealthy clients, whose spending tends to remain robust despite wider economic slumps.

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