Hermès (RMS.FR) Disappoints in key leather goods division
Hermès (RMS.FR) has once again proven that it is one of the most resilient luxury brands in terms of demand volatility, successfully attracting affluent customers even in times of macroeconomic uncertainty and geopolitical challenges. In the third quarter, the company recorded solid sales growth in virtually all regions, and its business model based on limited product availability allows Hermès to maintain high demand and margins. Demand was particularly strong in the United States, where concerns about the negative impact of tariffs proved unfounded – American customers continue to spend freely on high-end products, and footfall in boutiques remains high.
Despite the positive growth trajectory, Hermès’ report slightly disappointed investors – the key leather goods division, which accounts for the largest share of profits, fell slightly short of market expectations. This put pressure on the share price, although analysts emphasize that the fundamental strength of the brand’s business model remains unthreatened. Hermès’ strategy of consistent supply management and maintaining a high level of prestige continues to differentiate the company from its less exclusive competitors in the premium segment.
Key reported results for Hermès, along with market consensus:
- Total revenue in Q3 (constant exchange rates) +9.6% y/y, consensus: +9.3%
- Leather goods revenue +13.3%, consensus: +13.8%
- Watch revenue +8.8%, consensus: +2.4%
- Perfume revenue -7.2%, consensus: -9.2%
- Silk and textiles revenue +4.1%, consensus: +3.33%
- Ready-to-wear clothing revenue +6.6%, consensus: +5.33%
- Revenue in France +10.4%, consensus: +8.14%
- Revenue in Europe +10.3%, consensus: +9.73%
- Revenue in Japan +13.8%, consensus: +13.1%
- Revenue in Asia-Pacific +6.2%, consensus: +5.99%
- Revenue in the Americas +14.1%, consensus: +12.5%
- Total revenue: EUR 3.88 billion (+4.8% y/y), consensus: EUR 3.9 billion
The company’s shares are down nearly 5% today, falling to the 50-day exponential moving average (blue curve in the chart above). Long-term averages (100- and 200-day EMAs) indicate a continuing downward trend in the stock. Source: xStation
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