Birkin bag designer Hermes is catching no U.S. slowdown as sales increase 23%

April 17, 2023: Sales at Birkin bag maker Hermes increased 23% in the first quarter, above market anticipation, as wealthy people in China and Europe splurged on luxury style and accessories despite increased prices and global business turmoil.

Sales for the months ending in March are coming to 3.38 billion euros ($3.74 billion). At constant exchange rates, the increase of 23% beat a Visible Alpha consensus of 15% surged.

Hermes finance chief Eric du Halgouet told the journalists that store traffic in the United States, where rival LVMH flagged softer demand for fashion, leather goods and jewellery, continued to rise.

“What we’re witnessing in the United States is internationally an increase in traffic; the trends we’ve witnessed in April remain favourable, with, again, very dynamic traffic,” he stated.

“We remain vigilant as far as huge trends are concerned, but we have not witnessed a slowdown.”

Bernstein analyst Luca Solca said that U.S. growth for the company, which posted a 19% surge in sales in the Americas region compared to an 8% U.S. increase for LVMH, was noteworthy.

“It stated that Hermes’s superior ability to plough through adverse demand trends, which leverage its high brand desirability and waiting lists for signature products,” he stated.

“Higher-end exposure to richer consumers is probably also helping.”

Hermes raised prices by nearly 7% at the start of the year, a higher rate than its usual 2-3% annual increase.

In China, where Hermes was less connected than competitors by lockdowns that affected sales for many at the year’s end, revenues increased by 23% in the quarter. The Asia region, excluding Japan, generates almost half of the group’s annual sales.

Du Halgouet stated that the tourist flows from mainland China had started to Hong Kong and Macau, which improves business there, as well as Singapore and Australia, and anticipated Chinese shoppers to return slowly to Europe towards the year-end.

Stringent COVID lockdowns decreased luxury demand in China last year. According to consultancy Bain, the market refused 10%, ending a five-year growth streak that witnessed the market double between 2019 and 2021.