Hermes Reports Increased Sales in Third Quarter, With Strong Growth in China
Hermes experiences a modest increase in web sales during the third quarter
The luxury goods sector has experienced notable shifts in consumption patterns across the United States, Europe, and China, as economic conditions, consumer behavior, and regional market dynamics continue to evolve.
United States and Europe
In the United States, the aspirational middle- and upper-class consumers are seeing an increase in spending power due to easing inflation and higher disposable income, supported by a strong real estate market. Despite a broader decline in luxury spending, the U.S. remains a key market for luxury brands, with a growing ultra-high-net-worth (UHNW) population.
Europe's luxury demand remains cautious, with local consumers continuing to spend conservatively. However, international tourism is helping to offset this softness, as tax-free shopping in continental Europe had reached 138% of pre-COVID levels by May 2024, driven by foreign tourist arrivals.
China's Luxury Market Recovery
China's luxury market is expected to recover slightly in late 2025, supported by a high household savings rate and the emergence of new wealth hubs like Shenzhen and Wuhan. Despite this recovery, domestic luxury growth may stay below past trends due to increased international travel and a slower rise in UHNW individuals. Economic uncertainty, including geopolitical tensions and domestic policies, continues to influence consumer spending habits in China.
Hermes' Third Quarter Sales Growth
Amidst these global trends, Hermes, the French luxury goods conglomerate, reported a 8.8% sales growth in the third quarter, an increase from 8.1% in the previous quarter. The sales growth was driven by resilient growth in the US and a step-up in sales in continental China.
Axel Dumas, the CEO of Hermes, stated that there was a significant improvement in local consumption in China against the previous year, with tighter controls on luxury goods imports playing a role in lifting local consumption during the third quarter. Hermes has confirmed its full-year sales targets, with growth expected to be below 8% at constant exchange rates.
Continued Growth and Expansion
Hermes has continued to hire this year, taking on more than 300 new employees in its workshops. The improved sales trends for Hermes are in line with the broader luxury goods sector, as indicated by the forecast-beating numbers from LVMH and Kering last month.
The "No Buy 2025" trend among Gen Z has reduced demand for non-essential goods, impacting luxury brands globally. However, consumers are increasingly prioritizing experiential luxury over material goods, which is driving growth in travel, dining, and bespoke services. Additionally, the luxury resale market is growing, driven by preferences for sustainability and unique, limited-edition products. This trend is particularly strong among millennials and Gen Z.
Overall, while China's luxury market faces challenges, it is positioned for a moderate recovery. The U.S. and Europe are navigating different economic conditions, with the U.S. benefiting from increased spending power and Europe reliant on tourism to boost luxury demand. The resilience and adaptability of luxury brands, such as Hermes, will be crucial in navigating these evolving market dynamics.
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