Hermès International S.A. (EU:RMS) reported third-quarter sales largely in line with expectations, underscoring steady demand for high-end luxury despite a broader consumer slowdown. But a tepid rebound in China and a slight miss in its key Leather Goods & Saddlery unit weighed on investor sentiment.
Revenue reached €3.88 billion ($4.50 billion) for the quarter ended September 30, representing a 9.6% year-on-year increase at constant exchange rates. That was slightly higher than the 9% growth seen in the previous quarter, though just shy of the €3.90 billion analysts expected, according to Visible Alpha.
The company highlighted a modest improvement in China—its biggest market, accounting for roughly a third of global luxury demand—echoing similar stabilization signals from LVMH Moët Hennessy Louis Vuitton (EU:MC) and L’Oréal S.A. (EU:OR).
“One could note a very slight improvement in the third quarter,” said finance chief Eric de Halgouet, citing firmer property prices in major cities and stronger equity markets.
Hermès shares fell 2.5% in Paris following the update.
In the U.S., the company reported increased store traffic and balanced growth across regions. It plans further investment in the market after opening a new boutique in Nashville.
Jefferies analysts noted that Hermès’ 9.6% Q3 sales growth “will likely generate a debate amongst investors.”
“This at a time when the shares have suffered a major sector relative derating (of over 50% since mid-April), with markets increasingly enthused about a reboot of broader industry demand reinterpreting the consistency of RMS’ share gains as unexciting,” they added.
Hermès reiterated its medium-term revenue growth target at constant exchange rates but warned that macroeconomic, geopolitical, and monetary uncertainty continues to shape the global outlook.
Leather goods—including the iconic Birkin, Kelly, and Constance handbags—rose 13.3% year-on-year in Q3, slightly below the 14% consensus forecast from RBC Capital Markets.
“We believe shares might be under pressure near term, given the slight miss in key Leather Goods division, and elevated buy-side expectations reflecting more positive sentiment in luxury recently,” wrote RBC analyst Piral Dadhania.
Sales in clothing, silk accessories, and jewelry also increased during the quarter, contributing to overall top-line growth.
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