Handbag maker Hermes delivers sales rise as lust for luxury fashion holds firm in China despite Trump’s trade war
- High-end bag maker Hermes sales jump 12 per cent in its second quarter
- It expects to report half-year profits close to the record amount it made last year
- Its shares are flat today, after Hermes hit a record high in May
- Hermes said trade war between China and the US has not yet dented demand
Hermes International has hailed strong quarterly sales as Chinese shoppers continue to go wild for luxury fashion, despite the burgeoning trade war with the US and China’s slowing economic growth.
The French bag maker’s sales performance in this region – up by ‘double-digits’ – bodes well for the luxury market.
A number of high-end brands, including Burberry, Mulberry and Gucci-owner Kering, are increasingly dependent on buoyant Asian markets to offset dwindling tourist numbers and slowing trade in the UK and Europe.
A Hermès Kelly bag in Rose Gold and studded with diamonds… with price tag of almost $2m
Hermes, whose infamous Birkin handbags are worth more than a small car, said today is expects to unveil half-year profits on a par with the record earnings it generated in the same period last year.
Its sales advanced 7.2 per cent to 1.46 billion euros in the three months to July, and 12 per cent on a constant currency basis – smashing analyst expectations of a 10 per cent jump.
Chief executive Axel Dumas said that demand in China had not been affected by macroeconomic uncertainties, and that the unravelling trade war would not have an immediate impact on the business.
‘We have customers that travel,’ he said.’A trade war would be bad for everybody. I’d prefer there wouldn’t be a trade war, but I don’t think we will be the first company to be hit.’
He added that Hermes dropped its prices by 4 per cent in China at the start of the month when the Chinese government cut tariffs on imports.
Hermes is just one of a clutch of luxury brands that are reliant on high demand in China
Hermes, which derives the biggest chunk of earnings from leather goods, also posted strong growth in other divisions including in its fashion lines, perfumes and jewellery business.
Its shares were flat at 539.4 euros in early trading and are up by around 20 per cent so far in 2018.
Earlier this month, British luxury goods company Burberry fashioned a quarterly sales rise as strength in China mitigated a UK slowdown.