The Swiss Richemont Group’s share price plummeted 9% last week after the company announced poor quarterly sales in the United States.“ Hermes has completely crushed the entire luxury goods industry,” Bernstein’s Luca Solca wrote.“The power of Hermes replica is unquestionable, and the long waiting list eliminates any uncertainty about short-term demand.” Solca said that the French brand benefits from catering to high-end consumers, who are more adaptable to economic trends.
On Friday, the share price of Hermes rose 4% in Paris, making the company’s market value reach 212 billion euros.
Hermes’ performance is due to investors’ concerns that the record growth in the luxury goods industry in recent years is weakening due to the slowdown in the US economy.Since Bernard Arnault’s group reported a significant slowdown in US growth this week, LVMH’s share price has fallen.
Axel Dumas, the group’s executive chairman, said, “There seems to be some decoupling between Hermès and other companies that have announced their performance. We believe that the attractiveness of any of our products in the United States has not decreased. I think this is still an area with many opportunities.”
French luxury goods group Hermes bucked the trend in the first half of this year by achieving a slowdown in sales across the entire industry in the US market, with sales in all markets increasing by 22%.The Paris-based company said on Friday that its total revenue for the first half of the year soared to 6.7 billion euros from 5.5 billion euros in the same period last year.
Operating profit soared by 28% to 2.9 billion euros.Sales in France increased by 24%, while the American market, mainly the United States, increased by 20%.
The maker of Birkin bags and scarves attributes this resilience to its strategy of targeting customers’ places of residence, while some competitors try to capitalize on tourists’ high spending on luxury goods abroad.
In China, Hermes replicas are less affected by the COVID-19 blockade than other luxury goods groups because customers continue to buy locally.In the first half of the year, sales in Asia excluding Japan (with China leading the way) increased by 24%.
Dumas said: “The main source of growth is still the local customers in our country.” He pointed out that in the case of travel restrictions, especially in China, this trend will help support the company to survive COVID-19.Dumas added that although the average consumption of international customers in France is higher, Hermes has more local customers in France, which is the foundation of its business.
Dumas said that although some more ambitious customers in smaller cities in the United States seem to be under greater pressure than before, large stores in urban centers such as New York and Los Angeles are performing well.
