Hermes Sales Growth Slows as Weak Luxury Demand Persists

what happened

Hermes said its sales growth slowed in the third quarter as hopes for a rebound in luxury demand fade. Revenue for the period through September reached 4.1 billion euros ($4.61 billion), up 4.3% from a year earlier at constant currencies. The second-quarter increase was 6.7%. According to Update, the stock fell 6.7% to 1,264.50 euros after Deutsche Bank analysts described the quarterly results as disappointing.

The sector's weakness stems mainly from falling demand for high-end goods in China, where European brands also face growing competition from local labels. Hermes finance chief Eric du Halgouet said the macroeconomic context is not favorable and that lower store footfall in China hurt sales of fashion accessories, watches and shoes. LVMH had already warned about weak demand in the country last week.

The company still expects revenue growth at constant exchange rates in the medium term.

why it matters

Hermes' results suggest the recovery in luxury demand is still being delayed, and China remains the main risk for the whole sector. For investors, this signals pressure on European luxury makers that depend on Asian buyers.

market impact

Luxury sector: weak Chinese demand pressures shares of European luxury producers

tags

instruments