Hermès posts its slowest growth since 2020 as Chinese shoppers cut back on accessories

Birkin maker Hermès said on Thursday, 22 October, that third-quarter sales rose 4.3% at constant exchange rates to €4.10 billion, slightly below the 5.2% growth analysts polled by Visible Alpha had expected, Reuters reported. It was the group’s weakest quarterly growth since early 2020, when the pandemic shut its boutiques.

Bags strong, accessories weak

Leather goods, home of the Birkin and Kelly bags, grew 10.8%, in line with previous quarters. But the ready-to-wear and accessories division, more than a quarter of sales, fell 2%, its first decline in years. Finance chief Eric du Halgouet said the drop was mainly due to sluggish Chinese demand for high-volume accessories such as gloves, hair clips and belts; the division grew in every other region, and ready-to-wear alone rose even including China.

Du Halgouet called China, Hermès’ largest market, “very difficult”, but said activity there “remains stable” and the company will keep investing. He was upbeat about the United States, where Hermès has opened stores beyond the big coastal cities.

Shares and security

Shares fell 5% in early trading and are down 36% since the start of the year, Reuters said. After a Hermès store in Marseille was looted during the unrest in France, the company said it will step up security. Du Halgouet said the Birkin’s desirability is “intact” and production will keep growing by about 6% a year.