Hermes sales growth boosted by strong demand for Birkin and Kelly handbags

Demand for high-end Birkin and Kelly handbags helped drive strong sales growth at Hermes, but the luxury group’s shares fell on heightened investor expectations for the sector after LVMH reported a return to growth last week.

Third-quarter like-for-like sales rose by 9.6 per cent to €3.88 billion (US$4.51 billion; S$5.85 billion), the French luxury group said on Wednesday (Oct 22), compared with a year ago.

Sales in the Americas increased 14 per cent in the quarter, driven by an improvement in the US. In Asia, excluding Japan, sales rose by 6.4 per cent “notably in Greater China”, where luxury demand appears to be stabilising after a challenging couple of years for the industry.

Hermes, known for its leather goods and silk scarves, outperformed the market in the region throughout this period. 

The group’s finance chief, Eric du Halgouet, said there had been a “slight improvement” in China and that the stabilisation of the country’s property and stock markets made Hermès “optimistic” about the fourth quarter, he added.

Hermes, whose handbags start at about €10,000, benefits from tightly controlled production that means demand outstrips supply. Its wealthy client base makes it resilient in more difficult times.

Earlier this year, it overtook industry group LVMH as the world’s most valuable luxury company for the first time. However, the stock has since moderated as investors query whether Hermes can deliver further upside.

Its shares were down more than 4 per cent on Wednesday morning, giving it a market value of €227 billion.

Last week LVMH sparked a sector-wide rally in luxury after eking out 1 per cent growth in organic revenues in its third quarter, raising hopes the industry was emerging from a multiyear downturn.

Barclays analyst Carole Madjo said despite Hermes sales meeting estimates, the fall in its shares “reflects the fact that expectations may have increased after . . . the LVMH beat last week”.

LVMH is now worth about €309 billion after its shares surged last week on improved performance in fashion and leather goods, notably in China.

Hermes also reported strong demand for its leather goods — sales were up 13.3 per cent like for like in the quarter — but weaker sales of its more accessible perfume and beauty lines, which fell by 7.2 per cent, implies weaker demand from ‘aspirational’ luxury customers.

Shares in L’Oreal also fell 6 per cent on Wednesday morning after its third-quarter revenues slightly missed analyst expectations.

“The L’Oreal CEO stated that it was ‘fingers crossed’ for 11:11 [holiday] in China and a strong holiday season in the US and Europe. This lacked conviction, in our opinion, and we expect the market wanted a lot more visibility,” analysts at Deutsche Bank wrote.

Adrienne Klasa © 2025 The Financial Times.

This article originally appeared in The Financial Times.