Hermès Q1 sales are strong, group is upbeat as UK is among recovering markets

Luxury giant Hermès was the latest big name to update on recent trading on Thursday and it reported what we’ve seen elsewhere so far this year — “strong sales momentum across all business lines in all geographical areas”.

In fact, sales rose 33% at current exchanges rates in Q1, reaching €2.765 billion. That was a 27% rise at constant exchange rates, which was perhaps unsurprising given how Q1 last year was marked by lockdowns in many of its markets.

It said sales were “particularly dynamic” in its own stores, especially in America and Europe, driven by the acceleration in all the business lines and “sustained growth” in the Leather Goods division. 

Executive chairman Axel Dumas said: “The strong growth in sales at the beginning of this year reflects the desirability of our collections and the confidence of our customers in our artisanal and responsible approach.”

And he added that while the consumer and business backdrop may still be uncertain, the group is “accelerating its strategic investments, recruitments and training to support the growth of all the métiers of the house”.

Getting down to more detail, sales rose by 28% year-on-year in its stores — again likely to have been boosted by the big global reopening compared to a year ago. It also said its network “continued to develop with store openings and extensions, and the strengthening of online sales worldwide”.

Looking geographically, Asia, excluding Japan, was up 20% and benefited from a “very good Chinese New Year and from sustained activity, especially in Thailand, Singapore, and Australia”. However, since mid-March, Greater China has been hit with new health restrictions and some store closures, particularly in Shanghai and Shenyang. 

But the company had good news on stores in the region too. Its shops in Hong Kong’s Pacific Place and Macao’s One Central reopened in January and February, respectively, after renovation. A new store opened in Zhengzhou at the end of March, the first for the brand in the Chinese province of Henan. 

Meanwhile, Japan sales rose 17%, continuing a general picture of sales rises there.

The Americas surged 44%, with “a strong acceleration at the end of March, thanks to a good momentum in the US”.  Hermès is one of a string of latest luxury labels to see sales soaring in the US with that market being particularly buoyant in recent periods.

During the quarter, its South Coast Plaza store reopened on the Californian coast in Costa Mesa, near Los Angeles, after renovation and extension. 

There was good news on Europe too, which had been a difficult region for many luxury labels as the tourist flows on which they previously depended became a mere trickle. But this time, Europe, excluding France, saw sales up 44%, and France itself rose 40%. 

Of course this was helped by easy comparisons with last year’s lockdowns, but the company also saw “sustained growth particularly in the UK, Germany, Italy and Spain”.

Looking at its individual business units, the company said all divisions saw “strong momentum” by the end of March. RTW and Accessories “accelerated” with 44% sales rises at constant exchange rates, and the 16% growth in Leather Goods and Saddlery was based both on its increase in production capacity and sustained demand. The Silk and Textiles business line (+27%) “performed well” and Perfume and Beauty was up 18%.

Meanwhile, Watches (+62%) “achieved an outstanding performance” and ‘Other’ Hermès business lines (+37%) “confirmed their momentum, thanks to Homeware and Jewellery”.

That leaves the outlook for the rest of 2022 to deal with and it’s no surprise that the company said “the impacts of the health context are still difficult to assess”. 

It gave no specific figures but nonetheless struck an upbeat tone. The company said that its “highly integrated craftsmanship model and balanced distribution network, as well as the creativity of our collections and our customers' loyalty allow us to look to the future with confidence”.  

In the medium term, “despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates”.