Hermès brought in $1.89 billion in revenue for the third quarter, reporting that while its sales growth in Hong Kong slowed in the three months between July and September due to protests in the Chinese region, sales growth in Asia, as a whole, grew by 20.1 percent on a comparable basis. The Birkin and Kelly bag maker’s results – which see it with a total of $5.56 billion in sales for the year thus far – come as its luxury peers are reporting contracted sales for the third fiscal quarter of the year as driven by the months-long pro-democracy protests in Hong Kong.
Speaking specifically about Asia, which accounted for almost half of the Hermès sales for the 2018 fiscal year, the brand’s chief financial officer Eric du Halgouet said that “very favorable trends” in China have helped the Hermès boost sales, while the 182-year old brand’s “digital site has allowed [it] to attract new clients [and] given us visibility.” According to Reuters, in furtherance of its increased emphasis on digital, Hermès joins a larger pool of luxury brands that are “looking to draw shoppers outside China’s main cities where they may lack stores, and are targeting growing demand from ‘Gen Z’ shoppers in their early 20s, often supported by their parents’ income.”
In terms of its various divisions, Hermès cited 12 percent growth for the quarter (compared to the same quarter last year) for its Leather Goods and Saddlery group, which was up thanks to “the strength of the Hermès’ classics and their variations in new materials, such as wicker for the Kelly Picnic, other recent models, such as the Mosaïque and 24/24 bags, and newcomers like the Twins bag.” While its rival Louis Vuitton was busy christening a new factory in Texas this month in an attempt to boost stateside output, Hermès revealed that its production capacities “continued to increase” for the third quarter, and will be supplemented with four new French factories slated for opening in 2020, 2021, and 2022.
Interestingly, the 12 percent growth figure for Leather Goods growth was beaten by 17 percent growth in its Ready-to-Wear and Accessories division (accessories include belts, costume jewelry, gloves, hats and shoes), and also of note, according to Reuters, is the brand’s silk business, which – with a 8 percent increase in sales, “recovered slightly from a lull” in previous quarters.
In its full year report for 2018, Hermès revealed that Leather Goods and Saddlery accounted for a whopping 50 percent of its $6.62 billion in total sales – or $3.31 billion – followed by Ready-to-Wear and Accessories (21 percent) and Silk & Textiles (9 percent).