Birkin bags are favored by American consumers, Hermès' sales grew by 9.6% in the third quarter | Financial Report Insights

Hermès International continued its strong performance in the luxury goods industry, achieving steady sales growth in the third quarter, with Birkin bags continuing to attract wealthy consumers willing to spend lavishly.

The financial report released by Hermès on Wednesday showed that, at constant exchange rates, third-quarter revenue grew by 9.6% to €3.88 billion (approximately $4.52 billion), slightly exceeding analysts' expectations of a 9.3% increase. Regions including the United States performed particularly well, with quarterly revenue growth of 14.1%, surpassing expectations, alleviating market concerns about the impact of the Trump administration's tariff policies on consumer spending.

Hermès Chief Financial Officer Eric du Halgouet stated in a conference call that the strong growth in the U.S. market spanned various categories, with steady increases in store foot traffic. He added that, apart from a one-time price increase in May to address tariff impacts, Hermès has not raised prices again in the U.S.

This performance follows the reassuring sales data released by LVMH last week, contributing to an optimistic sentiment in the market that the demand slump in the luxury goods sector is easing. So far this year, Hermès' stock price has fallen by 3.1%, similar to LVMH's performance.

Scarcity Strategy Resists Industry Headwinds

Hermès has become one of the most resilient luxury brands by managing scarcity in its business model, maintaining growth even amid a cooling demand for high-end goods globally and concerns over tariffs. The company strictly controls product output, consistently achieving a growth rate of 6%-7% per year, with consumers sometimes needing to wait months to purchase a handbag.

This strategy has shielded Hermès from the impact of ordinary luxury consumers who have cut back on spending after the early boom years following the pandemic. Its core business segment, leather goods and saddlery, saw a sales increase of 13.3%, including classic styles such as Birkin, Constance, and Kelly, which account for nearly half of the company's annual sales, although this performance was slightly below expectations.

Improvement in the Chinese Market

Hermès Chief Financial Officer Eric du Halgouet indicated in a conference call that the Greater China region saw a "slight improvement" in the third quarter, noting that real estate prices in major cities are stabilizing and the stock market is showing positive trends, with Chinese consumers accounting for about one-third of global luxury goods sales.

This cautiously optimistic comment aligns with observations from other major brands, including LVMH and L'Oréal, which have also reported similar signs of recovery. The sales report released by LVMH last week triggered a surge of $80 billion in market value, with investors betting that the industry has bottomed out in China, although analysts caution that it is too early to declare the end of the two-year slump in the sector.

However, Eric du Halgouet stated that Hermès has not yet seen a change in trends in the current quarter. According to consensus data from Visible Alpha cited by UBS, Hermès' third-quarter sales growth was largely in line with analysts' expectations of a 10% increase. The company's continued robust performance further bolstered market confidence that the demand slump in luxury goods is easing