France-based Hermès International S.A. (FR:RMS) has outshined its rivals in the luxury sector with its impressive performance in Q3 2024. The maker of iconic bag lines like Birkin reported 11.3% growth in third-quarter sales, reaching €3.7 billion. The growth aligned with the 11% estimate of analysts at Jefferies. Hermès shares have gained over 2% as of writing.
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Hermès specializes in high-quality leather goods, silk products, lifestyle accessories, and perfumes. The Birkin bag, introduced in 1984, continues to be one of the most renowned bags from Hermès.
Other Luxury Brands Face Challenging Times
Unlike Hermès, other luxury brands in the sector are facing tough times with declining sales. Yesterday, Gucci owner Kering (FR:KER) reported a 16% decline in sales in the third quarter of 2024, which was worse than analysts’ expectations of a 12% drop. Revenue for Kering’s largest brand, Gucci, plummeted 25% to €1.64 billion.
Meanwhile, LVMH (FR:MC) reported disappointing sales in its third-quarter results last week, raising concerns for the luxury sector. The owner of brands like Dior, Louis Vuitton, Sephora, and Fendi experienced a 3% organic decline in revenue, falling short of analysts’ expectations. The company attributed this decline to decreased consumer spending in China.
Interestingly, Hermès focuses more on its VIP clients than other luxury brands due to the exclusivity of its leather goods. Moreover, each store can create a personalized product for its VIP clients, maintaining client loyalty and engagement with the brand.
Hermès Reports Strong Q3
Hermès reported a strong Q3 driven by its performance across all its regions. Among its regions, Japan reported an impressive 23% growth, driven by the loyalty of its local customers. Meanwhile, the Americas posted a 13% growth, while France reported a 14% surge in sales.
Within its segments, the Leather Goods and Saddlery division grew by 17%, with steady demand for both iconic models and new offerings. Overall, Hermès’ renowned classic designs and careful management of production and inventory helped it achieve sustained growth.
Is Hermès Stock a Good Buy?
Overall, RMS stock has received a Moderate Buy rating on TipRanks, backed by a total of 13 recommendations from analysts. It includes nine Buys and four Holds. The Hermès share price target is €2,258.61, which is 6.74% higher than the current trading level.
