Shares in Hermes slide as Q3 numbers underwhelm

(Sharecast News) - Shares in Birkin-maker Hermes International lost their sheen on Thursday, after challenging conditions in China weighed on quarterly sales growth. The French luxury group said sales in the three months to September end rose 4.3% on a constant currency basis to €4.1bn. However, that was below expectations, for third-quarter growth closer to 5.2%, and was Hermes' weakest quarterly sales growth rate since the start of the pandemic, when it was forced to close stores worldwide.

Sales at its leading leather good division jumped 10.8% to €1.9bn, but ready-to-wear and accessories reported a 2% decline to €1.1bn.

European sales strengthened 7.2%, but in Asia they rose by a more modest 1.9%. The company said Greater China, its largest market, was "stable over the period in a more difficult context".

Finance chief Eric du Halgouet added that the Chinese market was "very difficult" though he remained confident for the country's long-term prospects.

Sales in Hermes' far smaller Middle East market fell 4.5%, on the back of disruption and conflict in the region.

As at 1500 BST, the Paris-listed stock had shed 5%.

Axel Dumas, executive chair, said: "Despite a complex environment, Hermes continues its profitable growth and maintains its course. Convinced of the strength and relevance of our artisanal model, we see our vision as firmly rooted in the long-term and we look to the future with confidence."