By Mimosa Spencer
PARIS (Reuters) -Sales at Birkin bag maker Hermes rose sharply in the second quarter, lifted by fast growth in Europe and the United States, and rebounding strongly in China in June.
Following lockdowns in China in April and May the French leather goods company, which is also known for its silk scarves with equestrian prints, said that sales bounced back in the last month of the quarter.
Luxury retailers were hit hard by curbs on movement in key Chinese cities such as Shanghai and Beijing, with most reporting an over 30% drop in sales in the country – a crucial market for the industry – over the quarter.
In a call with reporters, Hermes Executive Chairman Axel Dumas declined to give a figure for the group’s Chinese sales in the quarter but said they had fallen less than the levels reported by rivals.
He said the June rebound had not fully offset the decline in April and May.
The group’s overall sales in the three months to June came to 2.7 billion euros ($2.76 billion), a 19.5% rise at constant exchange rates, which strips out currency fluctuations.
Hermes raised operating margins to a record 42% in the first half of the year, the highest level in the industry and a considerable achievement given that Hermes has in recent months raised prices less than competitors such as LVMH and Chanel.
Hermes, traditionally regarded as particularly resistant to downturns, has long been one of the steadiest performers in the luxury goods industry, in part due to its careful management of production and stocks, which have helped maintain its aura of exclusivity.
Its coveted $10,000 plus Birkin handbags tend to generate waiting lists, and can sometimes increase in resale value, adding to their appeal as a luxury purchase more immune to fashion trends and economic crises than other products.
“This set of results confirms that Hermes is likely going to be the most resilient luxury goods player in a recession, and an appropriate hiding place for those seeking cover,” said Luca Solca, luxury analyst at Bernstein.
($1 = 0.9793 euros)
(editing by Silvia Aloisi and Tomasz Janowski)
