Hermès Men's Fall 2019

PARIS — Sidestepping geopolitical turbulence, including protests in Hong Kong, Hermès International saw its Asian sales accelerate in the third quarter and surpass growth in all other regions.

Revenues in Asia-Pacific, excluding Japan, gained 21.8 percent at constant exchange rates, led by strength in mainland China, where Hermès recently opened a boutique in Xiamen, its 26th in China, while developing its online business with a local platform, hermes.cn. The company also reopened its Siam Paragon store in Bangkok.

By comparison, revenues at constant rates rose 15.2 percent in Japan, 10.7 percent in the Americas, 10.1 percent in Europe excluding France, and 10.4 percent in France.

Brexit seemed to be of no consequence, with the firm citing “robust growth in the U.K., in Italy and in the Parisian stores.”

Overall, revenues accelerated 18.2 percent at current exchange rates and 15 percent at constant rates in the three months ended Sept. 30 to reach 1.73 billion euros.

“All regions grew faster than we expected, with Asia-Pacific standing out,” Rogerio Fujimori, luxury analyst at RBC Europe Ltd., wrote in a research note.

Global revenues totaled 5.01 billion euros in the first nine months of the year, up 16.1 percent at current exchange and 13 percent at constant rates.

In the third quarter, sales of ready-to-wear and accessories rose 21.5 percent, growing faster than silk and textiles at 17.1 percent, watches at  14.3 percent, leather goods and saddlery at 11.5 percent, and perfumes at 2.1 percent.

“Leather goods grew broadly in line with expectations while ready-to-wear shone again…confirming Hermès’ strong momentum in both men’s and women’s ready-to-wear as well as in accessories/shoes,” Fujimori noted.

The French firm trumpeted “sustained” strength for its classic bag models like the Kelly in new materials such as wicker, as well as traction with newer handbag models Mosaique, 24/24 and Twins.

Hermès continues to ramp up production capacity in France, with new workshops slated to open next year in Guyenne and Montereau, another in Louviers in 2021 and yet another in the Ardennes region for 2022, which will be its 21st.

Chief executive officer Axel Dumas attributed its “exceptional sales growth” in the quarter to “our creative drive, excellent know-how and customers’ adhesion.”

The company confirmed “an ambitious goal for revenue growth at constant exchange rates” in the medium term, without providing a number.

RBC noted that Hermès offers “the strongest long-term fundamentals and the most resilient earnings profile in our luxury coverage.”

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