Hermès Q1 Sales Gain 17% as Jewelry, Home and Leather Goods Boom

Hermès is trotting ahead of its rivals even as luxury spending significantly slows, with sales of 3.81 billion euros in the first quarter, up 17 percent at constant exchange rates.

All regions logged double-digit growth in the three-month period ending March 31. It was particularly strong in Japan, where sales rose 25.2 percent at constant exchange rates. The rest of Asia recorded a 13.9 percent increase, although the company noted softer traffic in Greater China following the Lunar New Year.

“The solid sales growth in the first quarter 2024 reflects the loyalty of our clients worldwide, the strength of the group’s artisanal model and the desirability of our creations in a more complex environment. Hermès pursues its strategy based on exceptional know-how, the finest materials and uncompromising quality,” said Hermès executive chairman Axel Dumas.

With its first-quarter figures, the French luxury leather goods firm is staying ahead of rivals LVMH Moët Hennessy Louis Vuitton, whose sales rose 3 percent in like-for-like terms, and Kering, whose revenues fell 10 percent on a comparable basis in the three months to March 31.

Noting Hermès had beat consensus estimates of 13.9 percent growth in the quarter, Bernstein luxury goods analyst Luca Solca said the company benefitted from “a significantly deeper price increase reservoir, as it has been lagging competitor price increases out of the pandemic.”

Growing fastest in the quarter was the “other Hermès sectors” that includes jewelry and home products, which recorded a 24.5 percent leap in sales.

The maker of the Kelly and Birkin bags also saw sales in its core leather goods and saddlery business grow 20.3 percent. The company plans to boost its production with four additional leather goods workshops by 2027, including one coming on stream this year.  

Ready-to-wear revenues gained 15.9 percent while beauty and watches both saw their sales rise just above 4 percent. The company unveiled its new Hermès Cut model at the Watches and Wonders fair, with the first models arriving in stores in early April.

“During the Q1 reporting season, we expect the sector polarization to continue as sales growth should vary from double-digit negative for some names to double-digit positive for others and this is where Hermès is sitting thanks to its defensive profile, pricing power and brand desirability level,” said Barclays analyst Carole Madjo in a note ahead of the release on Thursday.

Compagnie Financière Richemont will be the next luxury player to present its figures, with full-year for the 2024 financial year coming May 17.

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