Hermès reported its weakest quarterly sales growth in six years as softer demand in China weighed on the French luxury group’s ready-to-wear and accessories business.
Third-quarter sales increased 4.3% from a year earlier on a currency-adjusted basis to €4.10 billion.
That was below the 5.2% growth expected by analysts.
Hermès shares fell approximately 5% following the results.
The weakness was concentrated in categories more exposed to broader luxury spending.
Ready-to-wear and accessories sales declined 2% from a year earlier, marking the division’s first contraction in years.
Hermès finance chief Eric du Halgouet described conditions in China as difficult while maintaining confidence in the company’s longer-term prospects in the country. (Reuters)
Leather goods remained considerably stronger.
Sales in the division producing Birkin and Kelly handbags increased 10.8%, demonstrating that demand at the highest end of the company’s product range remains comparatively resilient.
The divergence matters for the broader luxury industry.
China has historically been one of the world’s most important luxury markets, making changes in Chinese consumer behavior particularly significant for European brands.
Hermès is not alone in facing a more difficult environment.
Other major European luxury groups have also reported pressure associated with weaker Chinese spending, raising questions about the speed of the sector’s recovery. (Reuters)
Hermès intends to continue investing in China despite the near-term slowdown.
The company’s performance also demonstrates an important split within luxury spending: demand for scarce, high-end leather products remains comparatively strong even as more accessible fashion and accessory categories weaken.
Investors will watch whether Chinese demand stabilizes and whether the weakness remains concentrated in ready-to-wear and accessories or spreads into the company’s core leather-goods operation.
