PARIS — Hermès International clocked a brisk 15.5 percent rise in first-quarter sales, gaining momentum thanks to a lift from the label’s growing popularity in China, as well as an extra boost from currency swings.
Sales for the quarter were 1.61 billion euros, an 11.6 percent rise at constant rates, adding to evidence that high-end consumption remains firm with the all-important Chinese consumer.
Analysts were concerned at the start of the year that a flare-up in trade tensions between China and the U.S. could dampen the Chinese appetite for luxury goods, but recent results posted by the sector’s dominant groups LVMH Moët Hennessy Louis Vuitton and Kering have showed strength in that market, helped by government measures to promote consumption in the Mainland.
The accelerated sales growth shows “the continuation of a dynamic trend, particularly in China,” noted Axel Dumas, executive chairman of the luxury label.
RBC analyst Rogerio Fujimori called the quarterly performance a “rock solid” start to the year, citing the group’s organic sales increase as well as a 12.5 percent growth rate, at constant rates, for the leather goods and saddlery division.
Sales growth in Asia excluding Japan was 16.9 percent, while the figure stood at 6 percent in Europe and 9.8 percent in the U.S.
The leather goods and saddlery division, the largest business, posted a 12.5 percent increase to 808.2 million euros, as a recent boost in production has helped meet high demand for revisited classic handbag models as well as the Mosaïque and 24/24 bags, according to Hermès. The luxury house has bulked up its workshops in France with the Manufacture de l’Allan, while the Guyenne and Montereau sites are slated for completion by 2020 and a new site, Louviers, is scheduled for 2021.
The ready-to-wear and accessories activity clocked 13.4 percent growth, with shoes highlighted as selling particularly well.
The company attributed fast growth to the watches division, up 22.3 percent at constant rates, to the launch of the new women’s watch, Galop d’Hermès, designed by Ini Archibong.
Silk and textiles lagged other divisions, with a 2.5 percent increase over the three months.
Hermès also revealed Thursday the reopening of its Waikiki store in Honolulu. The company has been focusing on the U.S. market, and earlier this month opened a new store in the Meatpacking District in Manhattan and one last month in Orlando, Fla. Next up will be a Madison Avenue boutique, at number 706.
The company continues to stick to its “ambitious goal for revenue growth” at constant rates in the medium term.