Hermès Q2 Sales Rise 6.7% on European Tourism Rebound

French luxury group Hermès reported a slight acceleration in second-quarter growth, with sales rising 6.7% in currency-adjusted terms to €4.1 billion ($4.67 billion). The performance, which was in line with analyst expectations, marks an increase from the 6% growth seen in the first quarter of the year.

Performance Drivers

Hermès attributed the improved momentum to a recovery in tourism in its home market and an easing of the impact from conflict in the Middle East. The company reported a significant turnaround in France, where sales grew by 6% in the second quarter after contracting in the first.

"In the second quarter, we are seeing improved momentum in our Paris stores," CEO Axel Dumas said in a statement, noting that tourist traffic in the country had improved. This result contrasts with a recent report from industry peer LVMH that disappointed investors and highlighted a broader slowdown in the luxury sector.

Segment and Regional Breakdown

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The company's crucial leather goods division, which accounts for nearly half of its revenue and includes its iconic Birkin bags, saw sales grow by 10%. This was slightly below a Visible Alpha consensus estimate of 10.8%.

Performance in the Asia-Pacific region, excluding Japan, remained steady, with revenue growing 2.5% at constant exchange rates, consistent with the first quarter. Speaking on the Chinese market, Dumas told reporters, "I see the Chinese market stabilizing, but I do not yet see a fundamental rebound." He added that the company is "holding up well" in a challenging macroeconomic environment.

Market Context

Hermès has been one of the most resilient companies during a multi-year slowdown in the luxury goods industry, benefiting from its strategy of carefully managed production and a focus on ultra-wealthy clientele. Despite this relative strength, the company's shares have fallen 20% since the beginning of the year, reflecting broader market concerns.