PARIS – Hermès International continues to steadily gallop along while its peers struggle, with sales up 9.6 percent at constant currency in the third quarter.
“Hermès is maintaining its course, thanks to solid growth that reflects the strength of our model. We remain focused on navigating uncertainties, thanks to the loyalty of our customers and the commitment of our employees,” said Hermès chief executive officer Axel Dumas.
The ready-to-wear and accessories category, which has been a bit of a dark horse for the house as flashier rivals flail, showed continued momentum in the third quarter, with sales up 6.6 percent in the third quarter.
The results come less than a day after the company appointed 35-year-old British Jamaican designer Grace Wales Bonner as creative director for menswear, succeeding Véronique Nichanian, who had held the post for 37 years.
Nichanian will present her final collection for the house in January 2026, while Wales Bonner will present her first collection in January 2027, giving the new designer a long runway to ease into her new role.
The third quarter results were roughly in line with analysts’ expectations, but the news of growth across categories was well received.
“Given focused short-term money working against the stock and the lackluster share price performance of late, we expect this should be enough to support the shares. Even more so, considering that the positive surprise is driven by materially better non-leather divisions,” Bernstein analyst Luca Solca said in a note.
“In tougher periods of luxury demand, which is the sector setup currently, Hermes’ relative defensiveness is more attractive as it is likely to suffer less than peers, given its absolute luxury brand positioning and supply constrained model for its most coveted products, although we do anticipate a second consecutive year of margin compression,” added RBC analyst Piral Dadhania.
“The backbone of Hermes’ business model is sound – with elevated and non-replicable brand positioning, absolute price leader, supply chain advantages (higher level of vertical integration and hand-made products vs peers), long-term consistency in strategy, management and execution and exceptional financials,” Dadhania added.
Sales gained in all categories except the perfume and beauty sector, which saw sales at constant currency fall 7.2 percent.
Leather goods were up 13.3 percent at constant exchange, showing a slight miss from analysts expectations, which had pegged sales a full point higher.
“The leather goods miss could be signaling that they are holding back inventory for the year end – when they have difficult comps in America,” added Solca.
Sales of silks were up 6.6 percent. Sales in the combined jewelry and home category bounced 11.6 percent, while watches, which had seen a slowdown in the second quarter, were up 8.8 percent at constant currency.
By region, sales in Europe were up 10.3 percent at constant currency, while Japan continued its strong growth with sales up 13.8 percent.
“Hermès is mostly exposed to domestic consumers in Japan and was thus less impacted by the slowdown of Chinese tourists,” said Barclay’s analyst Carole Madjo.
The Middle East gained 11.7 percent. The rest of Asia, outside of Japan and “notably in Greater China,” the company said, saw sales climb 7.6 percent at constant currency.
Sales in the Americas rose 14.1 percent at constant exchange rates, despite price rises in the U.S.
But with the dollar at a low against the euro, currency fluctuations had a negative 254 million euro impact on revenues.
