The downturn in China hurt French luxury group Hermès’ first-quarter sales, causing revenue growth to fall short of expectations.
The Paris-listed maker of platinum bags, which is battling LVMH for the luxury industry’s biggest market cap, reported a 7% year-on-year rise in first-quarter organic revenue to 4.1 billion euros, below analysts’ expectations for 8.8% growth.
Hermès tends to be one of the most resilient brands in the industry, thanks to its ultra-wealthy clientele and the fact that its bags are in short supply. Its first-quarter sales slowed from an 18% rise in the fourth quarter of 2024, despite a high comparison base.
Sales in Asia outside Japan rose 1% in the quarter, “despite a particularly high comparison base and a decline in footfall in Greater China since the end of the first quarter of 2024,” the company said.
The luxury industry is struggling after a coronavirus boom as middle-class consumers rein in spending and China’s economy falters, factors exacerbated by U.S. President Donald Trump’s aggressive trade war.
Trump’s so-called reciprocal tariffs on U.S. trading partners have been more aggressive than expected, leading analysts at Bernstein and HSBC last week to slash their forecasts for a recovery in the luxury goods industry in the second half of the year.