Hermès Sees No Signs of Slowing Demand in China

    French leather goods company Hermes reported impressive Q1 2019 sales results thanks to a boost from Chinese consumers.
    French leather goods company Hermes reported impressive first quarter sales results thanks to a boost from Chinese consumers. Photo: Hermes official Instagram
    Matthew LubinAuthor
      Published   in Finance

    International luxury brands have reported stellar results thus far in 2019, and Hermès continued this upward trend with the release of its first-quarter results on April 25.

    While the market has given greater focus to giants in the industry, such as LVMH Moët Hennessy, Louis Vuitton (LVMH), and Kering, other brands that have pivoted to domestic consumption in China in recent years have also outperformed their peers who continue to rely on Chinese tourist shopping, which has been in decline.

    Hermès noted in its earnings release that strong sales in China helped it achieve its fastest revenue growth rate in four years, in the quarter. While sales in mainland China have proven a boon for luxury brands, most companies have expected slower sales growth, as the country’s economy continues to show signs of slowing down.

    Hermès, however, noted that it has benefited from its store extensions, particularly that of its retail outlet in the luxury shopping mall Shanghai IFC. It also attributed strong sales in mainland China to its new digital platform that was launched last October.

    In addition, the company has launched additional marketing campaigns in China to reach a wider audience since launching its e-commerce site. It has hopped on the pop-up event bandwagon that has benefited other luxury brands in the country, including Louis Vuitton and Prada. Such events have been helped along with various promotions via WeChat.

    Hermès CEO Axel Dumas said that the company’s performance in the quarter “shows the continuation of a dynamic trend, particularly in China."

    The company reported 1.78 billion (€1.6 billion) in revenue in quarter, an increase of 16 percent from the same quarter last year. Specifically, in greater China, the company’s sales grew over 10 percent year-on-year. And it wasn’t just the company’s leather goods that saw significant growth in the quarter — overall, every division experienced year-on-year sales growth.

    The company’s stock has risen about 27 percent this year, according to Bloomberg.

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