PARIS (Reuters) – Hermes reported organic revenue growth of 13.3 percent in the second quarter on Thursday as demand for the luxury group’s handbags remained resilient even as shoppers with less purchasing power cut back on spending.

The French house’s results contrast with a string of disappointing results from its peers, including Kering and LVMH, which have raised investor concerns about the sector’s uncertain outlook in the coming months.

Its iconic models and rigorous management of production and stocks have helped to strengthen the brand’s aura of exclusivity.

Hermès has not observed any major interruption in trends, the group’s manager, Axel Dumas, told journalists.

“Iconic categories like leather goods continue to drive growth,” said Luca Solca, an analyst at Bernstein, as the company’s largest division (leather goods and saddlery) posted growth of 17.9% in the second quarter.

The house is, however, seeing slightly less traffic from aspirational luxury customers – those who spend less in this area – which is having an impact on higher volume products like fashion accessories.

This caused sales at the group’s smallest division, silk and textiles, to fall by 5.6% in the quarter.

The French group’s quarterly turnover increased by 13.3% at constant exchange rates, to 3.70 billion euros. This figure is almost in line with analysts’ expectations, who were counting on a 13% increase, according to a Visible Alpha consensus.

Current operating profit for the first half reached 3.15 billion euros, compared to 3.2 billion expected by Visible Alpha.

ASIA RESISTS

Sales in the Asia-Pacific region, excluding Japan, rose 5.5% in the quarter, while Japan jumped 19.5%.

European luxury brands are benefiting from a surge in sales of luxury goods in Japan, where tourists, particularly Chinese, are taking advantage of the weak yen.

In China, the real estate crisis and job insecurity are weighing on the economy.

According to Axel Dumas, the company’s Chinese customers continue to buy in their home country, and unlike some of its peers, sales in Japan are mainly driven by locals and not tourists.

Hermès shares have risen by almost 6% since the start of the year, against the trend of the entire sector, with LVMH shares losing almost 10% and those of Kering, owner of Gucci, losing 30%.

The results published on Tuesday by LVMH, the flagship company in the sector, did not live up to expectations.

On Wednesday, Kering, another heavyweight in the sector, said it expected a sharp drop in its current operating profit in the second half.

Since March, the top ten luxury goods companies in the European STOXX 600 index have seen their stock market value drop by a total of 230 billion euros.

(Report by Mimosa Spencer, by Kate Entringer)

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