Hermes Q1 sales rise 27% at constant exchange rates

The logo of French luxury group Hermes is seen at a store in Zurich, Switzerland February 17, 2021. REUTERS/Arnd Wiegmann

PARIS, April 14 (Reuters) – Sales at Birkin bag maker Hermes (HRMS.PA) beat estimates in the first quarter, lifted by strong appetite for its luxury accessories, particularly in the United States and Europe, as the sector powers through turbulence from the war in Ukraine and COVID lockdowns in China.

The French luxury group said revenues at constant exchange rates came in at 2.8 billion euros ($3.06 billion) in the three months to March, up 27% at constant exchange rates, beating consensus estimates, which had forecast 15% organic growth.

The results confirm “the year is off with a bang,” said Luca Solca, analyst with Bernstein, noting “another solid consensus beat.”

All divisions clocked double-digit growth, including the leather goods and saddlery activity, which includes its famed Birkin and Kelly handbags and accounts for nearly half of annual sales at Hermes, up 15.8%.

Other divisions grew at an even faster pace, with ready-to-wear and accessories division up 44% while sales of watches rose 62%.

Hermes flagged a strong start of the year in China until the beginning of March, when some stores were closed due to restrictions aimed at stemming the spread of the coronavirus, Executive Vice President for Finance Eric du Halgouet told journalists in a call.

Hermes is in close contact with its 60 employees in Russia, continuing to pay their salaries while providing them with training sessions and psychological support, the executive said. Some have relocated to countries nearby, reinforcing the group’s operations.

The group last month said it was suspending commercial operations in Russia, closing its three stores in Moscow and putting plans to open a new one in St. Petersburg on hold. All exports to the country have been halted, including perfumes and beauty products, and Hermes is complying with rules banning the sales of products to oligarchs on sanctions lists, the executive added.

($1 = 0.9162 euros)

Reporting by Mimosa Spencer
Editing by Tomasz Janowski

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