Birkin bags are sought after by American consumers, Hermès reports 9.6% sales growth in the third quarter | Financial Report News

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

Hermès released its financial report on Wednesday, showing that at constant exchange rates, third-quarter revenue grew by 9.6% to 3.88 billion euros (about $4.52 billion), slightly above analysts' predicted increase of 9.3%. Regions including the United States performed particularly well, with quarterly revenue rising by 14.1%, exceeding expectations, alleviating concerns that the Trump administration's tariff policies would hurt consumer demand.

Hermès CFO Eric du Halgouet said on a conference call that strong growth in the U.S. market covered all categories, with steadily increasing store traffic. He added that apart from a one-time price hike in May to offset tariff impacts, Hermès has not raised prices again in the U.S.

This performance continues the wave of optimism that market demand for luxury goods is recovering after reassuring sales data from LVMH last week. So far this year, Hermès shares have fallen 3.1%, similar to LVMH's performance.

Scarcity Strategy Shields Against Industry Downturn

Thanks to its business model of managed scarcity, Hermès remains one of the most resilient luxury brands, continuing to grow in the face of cooling demand for high-end goods and tariff concerns. The company strictly controls product output, maintaining a steady annual growth rate of 6%-7%, with consumers sometimes waiting months to buy a handbag.

This strategy has insulated Hermès from ordinary luxury consumers cutting spending after the post-pandemic boom years. Its core leather goods and saddlery business saw sales grow 13.3%, including classic models like the Birkin, Constance, and Kelly, accounting for nearly half the company's annual sales, but performance was slightly below expectations.

Improvement Seen in the Chinese Market

Hermès CFO Eric du Halgouet told reporters on a conference call that Greater China saw "slight improvement" in the third quarter, noting that real estate prices in major cities have stabilized and the stock market is trending positively. Chinese consumers account for about one third of global luxury sales.

This cautiously optimistic view echoes observations from other leading brands, including LVMH and L'Oréal, both of which reported signs of recovery. LVMH's sales report last week sparked an $80 billion surge in shares, with the market betting the sector has bottomed out in China. However, analysts cautioned that it is too early to declare an end to the two-year industry slump.

However, Eric du Halgouet said Hermès has not yet seen any trend reversal so far this quarter. According to Visible Alpha consensus data cited by UBS, Hermès’ third-quarter sales growth was roughly in line with analysts’ expected increase of 10%. The company's continued solid performance has further strengthened market confidence that weak luxury demand is easing.

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