Birkin bag maker Hermes outpaced rivals with a 9% rise in quarterly sales reported today, showing continued appetite from rich shoppers for the French company's coveted $10,000 handbags.
Hermes Executive Chairman Axel Dumas said so far no further price hikes were planned this year after a general 7% rise globally and an additional 5% in the US, where the company flagged it would fully pass on the effects of tariffs to its clients.
Speaking to journalists on a call, Dumas said these price rises would probably suffice to offset the 15% tariff rate agreed between the Trump administration and the EU.
Sales for the second quarter to the end of June reached €3.9 billion, up 9% at constant currency rates, Hermes said, broadly in line with analyst expectations for a 10% rise, according to a Visible Alpha consensus cited by UBS.
Hermes, which this year overtook LVMH as France's most valuable listed company by market capitalisation, maintains tight control over production, raising it at a steady pace of around 6% to 7% per year, frustrating some shoppers who have to wait months for a handbag.
That strategy has helped the company buck an industry slowdown as big fashion labels like Chanel, Kering's Gucci and LVMH-owned Louis Vuitton and Dior grapple with declining sales.
A prolonged slump in China has pushed the focus of European luxury labels to the US this year, although demand there has been rocky due to a volatile stock market and fragile consumer confidence.
"I don't see any fundamental changes in the sales climate in China at the moment," Dumas said, adding that he still saw China's long-term potential as intact with no structural changes in consumer sentiment.
Consultancy Bain forecasts worldwide luxury goods sales will fall by between 2% and 5% in 2025 after a 1% decline last year.
The sales of Hermes's largest division producing leather goods, mostly handbags, sped up over the quarter, while growth of fashion and silk products slowed, the company said.
Shares in Hermes have risen 2% since the start of the year, outpacing the sector along with Cartier-owner Richemont, which has benefited from a surge in sales of high-end jewellery but is trading flat.
