A Citi analyst contends Hermès is set to surpass its biggest competitor in the next few years and become the largest luxury fashion brand.
Birkin bag maker Hermes reported a 17% surge in first-quarter sales on Thursday, sustaining a rapid growth rate from the previous quarter including in China, and underlining strong demand for high end luxury. Its first-quarter growth beat expectations and far outpaced larger rival LVMH, showing the strength of businesses operating in the top end of the market and defying broader weakness in key market China. Sales rose to 3.81 billion euros ($4.08 billion) for the three months to March 31 and beat expectations for a 13% rise, according to consensus provider Visible Alpha.
Waning Chinese demand for luxury goods has compounded the problems of Tuscany's traditional leather companies as the big fashion houses they supply reshape their strategies, leading to painful layoffs that could be just the start. LVMH, the world's largest luxury group, last week reported Asia revenues fell 6% in the first quarter. Many of the biggest luxury groups, which like Gucci base their leather goods production in Tuscany, had increased orders to respond to the post-pandemic boom.