(News Bulletin 247) – The saddler announced that it had generated 3.36 billion euros in revenues in the third quarter, reflecting growth at constant exchange rates of 15.6%, quite clearly above the consensus.

Once again, Hermès honors his rank. Already during the previous results season, the saddler had represented a rare brightening in a luxury sector which had then looked gloomy as a whole.

This still seems to be the case for this new wave of publications. Last week, both LVMH and L’Oréal showed activity below expectations, the group led by Bernard Arnault having also been strongly sanctioned by investors.

Conversely, Hermès delivers a satisfactory copy. Over the entire period from July to the end of September, the third largest market capitalization on the Paris market generated revenues of 3.365 billion euros, up 7.3% in data published over one year and of 15.6% excluding currency effects.

“The solid performance in the third quarter reflects the strong desirability of our collections around the world, with continued strong momentum in Asia and America. More than ever, in an uncertain global context, we are strengthening our investments and our teams to support the growth,” said Axel Dumas, the manager of Hermès, in a press release.

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Growth divided by three in Asia excluding Japan

Certainly, unsurprisingly, this increase in turnover reflects a deceleration compared to the previous quarter, where revenues increased by 27.5% at constant exchange rates.

But this slowdown had been clearly anticipated by analysts, who, according to a consensus cited by Deutsche Bank, were counting on growth at constant exchange rates limited to only 13%. Hermès therefore beat the consensus by more than 2.5 percentage points.

In detail, the Asia-Pacific region excluding Japan almost alone explains the slowdown in Hermès’ activity. In the third quarter, this region recorded growth at constant exchange rates of 10.2%, just above the 10% expected by consensus, reaching 1.58 billion euros. More than three times less than the growth at comparable rates achieved in the second quarter (33.7%).

Hermès invokes the basis of comparison to explain this slowdown. “For the record, the third quarter of 2022 was exceptional after the lifting of health measures in China,” the group mentions in its press release.

The exception of the sector

In the other regions, growth remained robust in the third quarter with an increase in revenue of 18.1% excluding currency effects in Europe to 814 million euros while the Americas region recorded an increase of 20.4% over these same bases. The consensus anticipated respective increases of 15% and 16% for these two regions.

By division, leather goods and saddlery saw growth reach 15.8% excluding currency effects while clothing and accessories grew by 18.3%.

The company’s publication satisfied the market, with Hermès shares gaining 1.1% around 10:00 a.m. and signing the second strongest increase in the CAC 40, after opening with an increase of more than 3.5%.

“Hermès is a real exception in the sector which will demonstrate better relative resilience in a possibly less virtuous environment,” appreciates Sarah Thirion of TP ICAP Midcap.

Stifel emphasizes that the group was able to overcome “very difficult bases of comparison” in this quarter. The bank also believes that the growth displayed by the company is “largely in line” with the expectations of the market which, according to it, has probably revised its demands upwards after the excellent publication, last week, of the Italian comparable Brunello Cucinelli.

Hermès “achieved a strong third quarter, with each region experiencing double-digit growth despite a slowdown in demand in the sector, thus once again confirming the uniqueness of its business model,” said UBS. .

Asked during an analyst conference about further price increases in 2024, Hermès financial director Eric du Halgouët indicated that the decision had “not yet been determined”. “We are in the process of launching the budgetary process and are looking at the increases in raw material prices business by business,” he explained. By 2023, the company had passed overall price increases of around 7%, he recalled.

Above all, the leader sent an encouraging signal on demand. The financial director indicated that the company was not seeing “a break in trend” in all of its markets, with traffic “still dynamic”.

“Now we are cautious, some of the publications in the sector mentioning a slowdown in more accessible products, which you call aspirational products. We do not perceive a similar trend at this stage but remain attentive in particular because of the geopolitical context” which can weigh on tourist flows, continued Eric du Halgouët.

The manager nevertheless argued that his company was “less exposed than others given the value of its house and its loyal and qualitative customers in all areas”.